def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o |
|
Preliminary Proxy Statement |
o |
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
þ |
|
Definitive Proxy Statement |
o |
|
Definitive Additional Materials |
o |
|
Soliciting Material Pursuant to §240.14a-12 |
KB HOME
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ |
|
No fee required. |
o |
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
|
(1) |
|
Title of each class of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Aggregate number of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined): |
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
Proposed maximum aggregate value of transaction: |
|
|
|
|
|
|
|
|
|
|
|
(5) |
|
Total fee paid: |
|
|
|
|
|
|
|
|
|
o |
|
Fee paid previously with preliminary materials. |
|
o |
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing. |
|
(1) |
|
Amount Previously Paid: |
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Form, Schedule or Registration Statement No.: |
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Filing Party: |
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
Date Filed: |
|
|
|
|
|
|
|
|
|
KB
HOME
10990
Wilshire Boulevard
Los Angeles, California 90024
(310) 231-4000
u
March 5, 2010
Dear Fellow
Stockholder:
Your officers and directors join me in inviting you to attend
the 2010 Annual Meeting of Stockholders of KB Home at
9:00 a.m., Pacific Time, on April 1, 2010 at The
Wedgewood Ballroom at The Fairmont Miramar Hotel in Santa
Monica, California.
The expected items of business for the meeting are described in
detail in the attached Notice of 2010 Annual Meeting of
Stockholders and Proxy Statement. We also will discuss our 2009
results and our plans for the future.
We look forward to seeing you on April 1.
Sincerely,
Jeffrey T. Mezger
President and Chief Executive Officer
Notice
of 2010 Annual Meeting of Stockholders
u
|
|
|
|
|
|
Time and
Date:
|
|
9:00 a.m., Pacific Time, on Thursday, April 1, 2010.
|
|
|
|
Location:
|
|
The Wedgewood Ballroom, The Fairmont Miramar Hotel, 101 Wilshire
Boulevard, Santa Monica, California 90401.
|
|
|
|
Agenda:
|
|
(1) Elect nine directors, each to serve for a
one-year term;
|
|
|
|
|
|
(2) Ratify the appointment of Ernst & Young LLP
as our independent registered public accounting firm;
|
|
|
|
|
|
(3) Approve the KB Home 2010 Equity Incentive Plan;
|
|
|
|
|
|
(4) Consider three stockholder proposals, if properly
presented at the meeting; and
|
|
|
|
|
|
(5) Transact any other business that may properly
come before the meeting or any adjournment or postponement of
the meeting.
|
|
|
|
|
|
The accompanying Proxy Statement describes these items in more
detail. We have not received notice of any other matters that
may be properly presented at the meeting.
|
|
|
|
Record Date:
|
|
You can vote at the meeting and at any postponement or
adjournment of the meeting if you were a stockholder of record
on February 10, 2010.
|
|
|
|
Voting:
|
|
Please vote as soon as possible, even if you plan to attend
the meeting, to ensure that your shares will be represented.
You do not need to attend the meeting to vote if you vote before
the meeting. If you are a holder of record, you may vote your
shares via mail, telephone or the Internet. If your shares are
held by a broker or financial institution, you must vote your
shares as instructed by your broker or financial institution.
|
|
|
|
Annual
Report
|
|
Copies of our Annual Report on Form 10-K for the fiscal year
ended November 30, 2009 (the Annual Report),
including audited financial statements, are being made available
to stockholders concurrently with our Proxy Statement. We
anticipate that these materials will first be made available on
or about March 5, 2010.
|
Important
Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting To Be Held on April 1, 2010: Our Proxy
Statement and Annual Report are available online at
www.kbhome.com/investor/proxy.
By
Order of The Board of Directors,
Wendy C.
Shiba
Executive Vice President,
General Counsel and Secretary
Los Angeles,
California
March 5, 2010
Table of
Contents
|
|
|
|
|
|
|
|
i
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
6
|
|
|
|
|
6
|
|
|
|
|
7
|
|
|
|
|
8
|
|
|
|
|
12
|
|
|
|
|
12
|
|
|
|
|
16
|
|
|
|
|
17
|
|
|
|
|
22
|
|
|
|
|
24
|
|
|
|
|
26
|
|
|
|
|
28
|
|
|
|
|
28
|
|
|
|
|
29
|
|
|
|
|
30
|
|
|
|
|
31
|
|
|
|
|
31
|
|
|
|
|
31
|
|
|
|
|
31
|
|
|
|
|
33
|
|
|
|
|
33
|
|
|
|
|
34
|
|
|
|
|
38
|
|
|
|
|
39
|
|
|
|
|
39
|
|
|
|
|
40
|
|
|
|
|
42
|
|
|
|
|
43
|
|
|
|
|
45
|
|
|
|
|
45
|
|
|
|
|
46
|
|
|
|
|
46
|
|
|
|
|
56
|
|
|
|
|
57
|
|
|
|
|
58
|
|
|
|
|
58
|
|
|
|
|
59
|
|
|
|
|
59
|
|
Admission to
the Annual Meeting
Due to space limitations at the Annual Meeting location, we must
limit attendance to only stockholders of record on
February 10, 2010, authorized proxy holders of stockholders
of record on February 10, 2010, individuals who have been
designated to present a stockholder proposal, and a few invited
guests of the Board of Directors. Non-transferable admission
tickets for the Annual Meeting will be distributed on a
first-come, first-served basis, and we cannot guarantee
admission for all stockholders. An admission ticket and picture
identification (such as a valid drivers license or
passport) will be required to enter the Annual Meeting. A
professional business dress code will be observed at the Annual
Meeting.
If you are eligible and wish to attend the Annual Meeting,
please send your request for an admission ticket in writing to
William A. Richelieu, Assistant Corporate Secretary, KB Home,
10990 Wilshire Boulevard, 7th Floor, Los Angeles, California
90024. All requests must be in writing and received on or
before Friday, March 19, 2010 and include the following
information:
|
|
|
|
If you are a stockholder of record
|
|
|
If you are a beneficial stockholder
|
|
|
|
|
A copy of a proxy card or notice showing
stockholder name and address;
Name, mailing address and contact
telephone number of an authorized proxy representative, if one
is appointed, plus a copy of the signed legal proxy; and
The complete address where your
admission ticket should be mailed.
|
|
|
A copy of a brokerage account voting
instruction card showing stockholder name and address, or a
broker letter verifying record date ownership;
A copy of a brokerage account statement
showing KB Home stock ownership on the record date; and
The complete address where your
admission ticket should be mailed.
|
|
|
|
|
Please note any special assistance needs in your admission
ticket request. Once your request is processed, an admission
ticket will be sent to you by mail to the address given.
i
KB
HOME
10990
Wilshire Boulevard
Los Angeles, California 90024
(310) 231-4000
Proxy
Statement
for
the
2010
Annual Meeting of Stockholders
General
Information
What Is
This Proxy Statement For?
Your Board of Directors (the Board) is furnishing
this Proxy Statement to you to solicit your proxy for our 2010
Annual Meeting of Stockholders. The items of business for the
Annual Meeting are described in the accompanying Notice of 2010
Annual Meeting of Stockholders. This Proxy Statement contains
information to help you decide how you want your shares to be
voted. We anticipate that this Proxy Statement and the form of
proxy will first be made available on or about March 5,
2010.
Who Can
Vote?
Holders of record of the 76,836,444 shares of common stock
outstanding at the close of business on the record date
(February 10, 2010) are entitled to one vote for each
share held. The trustee of our Grantor Stock Ownership Trust
(the GSOT) will vote the 11,217,051 shares the
GSOT held on the record date based on the instructions received
from our employees who hold unexercised options under our
employee equity compensation plans. Accordingly, a total of
88,053,495 shares are entitled to vote at the Annual
Meeting. There is no right to cumulative voting.
|
|
|
|
Attending the Annual Meeting
|
Date:
|
|
Thursday, April 1, 2010
|
Place:
|
|
The Wedgewood Ballroom
The Fairmont Miramar Hotel
101 Wilshire Boulevard
Santa Monica, CA 90401
|
To Attend:
|
|
You must have an admission ticket and a valid photo ID, as
described above on page i. A professional business dress code
will be observed. Parking is available at the meeting
location. You may be subject to a security check.
|
Note:
|
|
No cameras, recording equipment, electronic devices, large
bags, briefcases or packages will be permitted at the Annual
Meeting. Additional rules of conduct will apply at the
meeting.
|
|
|
|
Who is a
Holder of Record?
If your shares are registered directly in your name with our
transfer agent, Mellon Investor Services LLC, you are considered
the holder of record of those shares.
If your shares are held in a stock brokerage account or by a
financial institution or other holder of record, you are a
beneficial owner of those shares held in street
name. If you are a beneficial owner, for ease of
reference, this Proxy Statement will use the term
broker to describe the person or institution that is
the holder of record of your shares.
Proxy
Solicitation Costs
We will pay the cost to solicit proxies for the Annual Meeting.
In addition to this Proxy Statement, our officers, directors and
other employees may solicit proxies personally or in writing or
by telephone, facsimile or email for no additional compensation.
We will, if requested, reimburse banks, brokerage houses and
other custodians, nominees and certain fiduciaries for their
reasonable expenses in providing material to their principals.
We have hired Georgeson Inc., a professional soliciting
organization, to assist us in proxy solicitation and in
distributing proxy materials. For these services, we will pay
Georgeson a fee of $9,000, plus reimbursement for
out-of-pocket
expenses.
1
Voting
Information
|
|
|
Quorum
Requirement
|
|
For stockholders to take action at
the Annual Meeting, a majority of the shares of our common stock
outstanding on the record date must be present or represented at
the Annual Meeting. Abstentions and broker
non-votes are counted for this purpose.
|
|
Broker
Non-Votes
|
|
A broker non-vote
arises when a broker does not receive instructions from a
beneficial owner and does not have the discretionary authority
to vote on an item. For this Annual Meeting, we understand that
brokers have discretionary authority to vote only on the
proposal to ratify the appointment of our independent registered
public accounting firm.
|
|
Director Voting
Notice
|
|
In the past, brokers had
discretionary authority to vote in the election of directors if
they did not receive instructions from a beneficial holder. Due
to a New York Stock Exchange (NYSE) rule change,
brokers do not have this discretionary authority effective
January 1, 2010. Accordingly, if you are a beneficial owner,
you must instruct your broker on how you want your shares to be
voted in the election of directors in order for your shares to
be counted in the election.
|
|
Proxy
Voting
|
|
Holders of record may vote by proxy
via mail, telephone or the Internet as described on the proxy
materials provided to you. If you are a beneficial owner, your
broker should send you proxy voting materials and instructions,
and may do so electronically.
|
|
Voting at the Annual
Meeting
|
|
Holders of record (or someone
designated by a signed legal proxy) may vote in person at the
Annual Meeting. If you are a beneficial owner, you must obtain
a legal proxy from your broker and present it with your ballot.
Voting at the Annual Meeting will replace any prior proxy voting.
|
|
Voting By Named
Proxies
|
|
The named proxies for the Annual
Meeting Jeffrey T. Mezger and Wendy C. Shiba (or
their duly authorized designees) will follow
submitted proxy voting instructions. They will vote as the
Board recommends as to any submitted instructions that do not
direct how to vote on any item, and will vote on any other
matters properly presented at the Annual Meeting in their
judgment.
|
|
Closing of
Polls
|
|
Polls will close at approximately
9:30 a.m., Pacific Time, on April 1, 2010. Holders of
record may vote via Internet and telephone until
11:59 p.m., Eastern Time, on March 30, 2010. Proxy voting
instructions for shares held by the KB Home Common Stock Fund in
our 401(k) Savings Plan or the GSOT must be received by
11:59 p.m., Eastern Time, on March 29, 2010. Each broker
sets proxy voting deadlines for its beneficial owners.
|
|
Changing Your
Vote
|
|
Holders of record may revoke proxy
votes at any time before polls close by submitting a later vote
(a) in person at the Annual Meeting, (b) via mail, telephone or
the Internet before the above-listed deadlines, or (c) to our
Corporate Secretary at the address listed below under the
heading Corporate Governance Highlights by our close
of business on March 30, 2010. If you are a beneficial
owner, you must contact your broker to revoke any prior voting
instructions. There are no dissenters rights or rights of
appraisal with respect to any item to be acted upon at the
Annual Meeting.
|
|
Votes Required to Approve or
Adopt Proposals
|
|
Election of
Directors. To be
elected, each director nominee must receive a majority of votes
cast in favor (i.e., the votes cast for a nominees
election must exceed the votes cast against the nominees
election). Shares that are not present or represented at the
Annual Meeting and abstentions will not affect the election
outcome.
|
|
|
|
Other
Proposals: Approval of
each of the other proposals requires the affirmative vote of a
majority of the shares present or represented, and entitled to
vote thereon, at the Annual Meeting. Abstentions will have the
same effect as an against vote. Broker non-votes
will affect only the proposal to approve the 2010 KB Home Equity
Incentive Plan, where they will have the same effect as an
against vote if the total votes cast on the proposal
do not exceed 50% of the shares of our outstanding common stock.
|
|
Inspectors of Elections
|
|
We have engaged our transfer agent
to count the votes and act as an independent inspector of
election. William A. Richelieu, Assistant Corporate Secretary,
will also act as an inspector of election.
|
2
Corporate
Governance and Board Matters
|
|
|
H
|
|
Ten current
Board members nine independent members, including an
independent Non-Executive Chairman
|
I
|
|
Full Board elected annually using a
majority vote standard
|
G
|
|
Standing Board Committees are entirely
composed of independent directors
|
H
|
|
All incumbent directors standing for
re-election attended at least 75% of Board-related meetings
|
L
|
|
Non-employee directors are subject to an
equity ownership requirement during their Board service
|
I
|
|
Our Certificate of Incorporation,
By-laws, Corporate Governance Principles, Charters for all Board
|
G
|
|
Committees, and Ethics
Policy are available online at
www.kbhome.com/investor/corporategovernance
|
H
|
|
As set forth in our Corporate Governance
Principles, any interested party may write to the Board,
|
T
|
|
the Non-Executive Chairman of the Board or to any
non-employee director in care of our
|
S
|
|
Corporate Secretary at KB Home, 10990 Wilshire
Boulevard, Los Angeles, CA 90024.
|
|
|
|
Role of
the Board of Directors
The Board is elected by our stockholders to oversee the
management of our business and to assure that the long-term
interests of our stockholders are being served. The Board
carries out this role subject to Delaware law and our
Certificate of Incorporation, By-laws and Corporate
Governance Principles.
Corporate
Governance Principles
Our Corporate Governance Principles provide a framework within
which we conduct our business and pursue our strategic goals.
The Nominating and Corporate Governance Committee regularly
reviews our Corporate Governance Principles, and the full Board
approves changes as it deems appropriate.
Ethics
Policy
We expect all of our directors and employees to follow the
highest ethical standards when representing KB Home and our
interests. To this end, all employees, including our senior
executive management, and our directors must comply with our
Ethics Policy. The Audit Committee regularly reviews our Ethics
Policy and approves changes that it deems necessary or
appropriate. The Audit Committee approved changes to our Ethics
Policy that became effective as of October 16, 2009.
Executive
Sessions of Non-Employee Directors
As part of the Boards regularly scheduled meetings, the
non-employee directors meet in executive session. Any
non-employee director can request additional executive sessions.
Stephen F. Bollenbach, the Non-Executive Chairman of the Board,
schedules and chairs the executive sessions.
Board
Membership
As of the date of this Proxy Statement, the Board has ten
members. Except for Mr. Mezger, our President and Chief
Executive Officer (CEO), no director is an employee.
Board
Committees
Three standing Board Committees assist the Board:
|
|
|
|
|
Audit and Compliance (Audit Committee)
|
|
|
|
Management Development and Compensation
(Compensation Committee)
|
|
|
|
Nominating and Corporate Governance
(Nominating/Governance)
|
The Board appoints the members of and has adopted a charter for
each Committee. The Board and each Committee conducts an annual
evaluation of its performance.
Board
Meetings and Attendance
The Board and Board Committees hold regular meetings on a set
schedule and may hold interim meetings and act by written
consent from time to time as necessary or appropriate. The Board
held five meetings in our 2009 fiscal year. Mr. Bollenbach,
as the Non-Executive Chairman of the Board, presides over all
meetings at which he is present.
In our 2009 fiscal year, each director attended at least 75% of
the meetings of the Board and the Board Committees on which he
or she served. We expect directors to attend our annual
stockholder meetings. All directors serving at the time attended
our 2009 Annual Meeting of Stockholders, which was held on
April 2, 2009.
3
Board
Leadership Structure and Risk Oversight
The Board believes that separate individuals should hold the
positions of Chairman of the Board and Chief Executive Officer,
and that the Chairman should not be an employee. The Board has
been led by an independent Non-Executive Chairman since 2007.
Under our Corporate Governance Principles, the Chairman of the
Board is responsible for coordinating the Boards
activities, including the scheduling of meetings and executive
sessions of the non-employee directors and the relevant agenda
items in each case (in consultation with the Chief Executive
Officer as appropriate). The Board believes this leadership
structure has enhanced the Boards oversight of and
independence from our management, the ability of the Board to
carry out its roles and responsibilities on behalf of our
stockholders, and our overall corporate governance compared to
our prior combined Chairman/Chief Executive Officer leadership
structure.
The Board has delegated its risk oversight responsibilities to
the Audit Committee as described below under the heading
Board Committee Responsibilities and Related
Matters Audit Committee. In accordance with
the Audit Committees Charter, each of our senior financial
and accounting, legal and internal audit executives report
directly to the Audit Committee regarding material risks to our
business, among other matters, and the Audit Committee meets in
executive sessions with each such executive and with
representatives of our independent registered public accounting
firm. The Audit Committee Chair reports to the full Board
regarding material risks as deemed appropriate.
Board
Committee Composition and 2009 Fiscal Year Meetings
The chart below shows the current members of the standing Board
Committees as of the date of this Proxy Statement and the number
of meetings each Board Committee held during our 2009 fiscal
year. Mr. Mezger does not serve on any Board Committees.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominating/
|
Director
|
|
|
Audit
|
|
|
Compensation
|
|
|
Governance
|
Stephen F. Bollenbach
|
|
|
|
|
|
X
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
Ronald W. Burkle
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
Timothy W. Finchem
|
|
|
X
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth M. Jastrow, II
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
Robert L. Johnson
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Melissa Lora
|
|
|
Chair
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
Michael G. McCaffery
|
|
|
X
|
|
|
Chair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leslie Moonves
|
|
|
|
|
|
|
|
|
Chair
|
|
|
|
|
|
|
|
|
|
|
Luis G. Nogales
|
|
|
X
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Meetings:
|
|
|
9(a)
|
|
|
5
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Includes conference calls with our management to review our
quarterly earnings releases prior to their issuance. |
Board
Committee Responsibilities and Related Matters
The Board has delegated certain responsibilities and authority
to each Board Committee as described below. At each regularly
scheduled Board meeting, each Board Committee Chair (or another
designated Board Committee member) reports to the full Board on
his or her Board Committees activities.
Audit Committee. The Audit Committee is
responsible for general oversight of our (a) accounting and
reporting practices; (b) internal control over financial
reporting and disclosure controls and procedures; (c) audit
process, including our independent registered public accounting
firms qualifications, independence, retention,
compensation and performance, and the performance of our
internal audit department; and (d) compliance with legal
and regulatory requirements and management of matters in which
we have or may have material liability exposure. In addition,
the Audit Committee may act for the Board to authorize us or our
subsidiaries or affiliates to incur, guarantee or redeem debt or
debt securities.
4
The Audit Committee also oversees the preparation of a required
report to be included in our annual proxy statement and is
charged with the duties and responsibilities listed in its
charter. The Audit Committees report is provided below
under the heading Audit and Compliance Committee
Report. The Audit Committee is a separately designated
standing audit committee as defined in Section 3(a)(58)(A)
of the Securities Exchange Act of 1934.
The Board has determined that each current member of the Audit
Committee is independent under our Corporate Governance
Principles (as described below under the heading Director
Independence), NYSE listing standards and Securities and
Exchange Commission (SEC) rules. The Board has also
determined that each current member of the Audit Committee is
financially literate under NYSE listing standards, and that
Ms. Lora qualifies as an audit committee financial
expert under SEC rules.
Compensation Committee. The Compensation
Committee is responsible for (a) the evaluation and
compensation of our CEO; (b) the compensation of our senior
executive management (other than our CEO), which consists of our
CEOs direct reports and any designated executive
officers (as that term is defined in
Rule 3b-7
of the Securities Exchange Act of 1934); (c) oversight of
our efforts to attract, develop, promote and retain qualified
senior executive management; and (d) the evaluation and
determination of non-employee director compensation and
benefits. The Compensation Committee oversees the preparation of
the compensation discussion and analysis to be included in our
annual proxy statement, recommends to the Board whether to so
include the compensation discussion and analysis, provides an
accompanying report to be included in our annual proxy
statement, and is charged with the duties and responsibilities
listed in its charter. The compensation discussion and analysis
for this Proxy Statement is provided below under the heading
Compensation Discussion and Analysis, and the
Compensation Committees report is provided below under the
heading Management Development and Compensation Committee
Report.
The Board has determined that each current Compensation
Committee member is independent under our Corporate Governance
Principles and NYSE listing standards, is a non-employee
director under SEC rules and is an outside
director under Section 162(m) of the Internal Revenue
Code (the Code).
Overview of Executive Officer and Non-Employee Director
Compensation Processes and Procedures. Under our
By-laws, the Board has the authority to fix the compensation of
our executive officers and non-employee directors. The Board has
delegated this authority to the Compensation Committee as
provided in the Compensation Committees charter. Per its
charter, the Compensation Committee annually reviews and
approves the goals and objectives relevant to our CEOs
compensation, evaluates his performance in light of those goals
and objectives and other criteria, and, either as a committee or
together with the other independent directors (as directed by
the Board), determines and approves our CEOs compensation
based on the evaluation. The Compensation Committee also
evaluates, in conjunction with our CEO, the performance of our
senior executive management, and reviews and approves their
compensation.
The Compensation Committee exercises the Boards authority
with respect to our employee compensation and benefits plans
(including our employee equity compensation plans) and policies,
except to the extent that the Board, in its discretion, reserves
its authority. This delegation includes the authority to select
eligible participants, recommend and approve grants and awards,
set performance targets and other award eligibility criteria,
approve an aggregate incentive pool for any annual or long-term
incentive awards, interpret the plans terms, delegate
certain responsibilities and adopt or modify as necessary any
rules and procedures to implement the plans, including any rules
and procedures that condition the approval of grants and awards.
The Compensation Committee also periodically reviews our
compensation and benefit plans and, from time to time, will
recommend to the Board new material plans or modifications to
existing plans. The Compensation Committees exercise of
this authority, including specific considerations applied and
determinations made, with respect to the compensation and
benefits awarded to our named executive officers under our plans
is discussed below under the heading Compensation
Discussion and Analysis.
The Compensation Committee, from time to time, reviews and makes
recommendations to the Board regarding non-employee director
compensation and benefits consistent with the goals of
recruiting the highest caliber directors to serve on the Board,
aligning directors and stockholders interests, and
fairly paying directors for the work required to serve
stockholder interests given our size, scope and complexity of
operations.
5
In its oversight of executive officer and non-employee director
compensation, the Compensation Committee seeks assistance from
our management and has engaged an outside compensation
consultant, Semler Brossy Consulting Group LLC (Semler
Brossy), as further described below under the heading
Compensation Discussion and Analysis. The
Compensation Committee may delegate to a subcommittee or to our
management any duties and responsibilities as the Compensation
Committee deems to be appropriate and in our best interests, but
it cannot delegate to our management the authority to grant
equity-based awards.
Compensation Committee Interlocks and Insider
Participation. All current Compensation Committee members
served throughout our 2009 fiscal year. No member of the
Compensation Committee during our 2009 fiscal year was part of a
compensation committee interlock as described under
SEC rules. In addition, none of our executive officers served as
a director or member of the compensation committee of another
entity that would constitute a compensation committee
interlock.
Nominating/Governance Committee. The
Nominating/Governance Committee is responsible for
(a) providing oversight of our corporate governance
policies and practices; (b) identifying, evaluating and
recommending to the Board individuals who are qualified to
become directors; and (c) performing ongoing assessments of
the Boards size, operations, structure, needs and
effectiveness. The Nominating/Governance Committee also reviews
and makes recommendations to the full Board on proposed changes
to our Certificate of Incorporation and By-laws, periodically
assesses and recommends action with respect to stockholder
rights plans and other stockholder protections, reviews and
approves or ratifies (as applicable) related party
transactions, as further described below under the heading
Certain Relationships and Related Party
Transactions, and is charged with the duties and
responsibilities listed in its charter.
The Board has determined that each current member of the
Nominating/Governance Committee is independent under our
Corporate Governance Principles and NYSE listing standards.
Director
Qualifications
We believe our directors should possess the highest personal and
professional ethics, integrity, judgment and values, and be
committed to representing the long-term interests of our
stockholders. Our directors should also have an inquisitive and
objective perspective, and be able and willing to dedicate the
time necessary to Board and Board Committee service.
The Nominating/Governance Committee regularly assesses the
skills and characteristics of current and potential directors
and may consider the attributes listed to the right, among
others.
The Nominating/Governance Committee and the Board determined
that each individual that the Board will present at the Annual
Meeting as a director nominee possesses the characteristics
described above in the first paragraph under the heading
Director Qualifications, as well as certain specific
qualifications, which are described below with other
biographical information under Proposal 1: Election
of Directors.
|
|
|
Selected Director Attributes
|
|
Personal qualities, accomplishments and reputation
in the business community
|
|
Financial literacy, financial and accounting
expertise and significant business, academic or government
experience in leadership positions or at senior policy-making
levels
|
|
Geographical representation in areas relevant to our
business
|
|
Diversity of background and personal experience
|
|
Fit of abilities and personality with those of
current and potential directors in building a Board that is
effective, collegial and responsive to the needs of our business
|
|
Independence and an absence of conflicting time
commitments
|
|
Director
Independence
We believe that a substantial majority of our directors should
be independent. To be independent, the Board must affirmatively
determine that a director does not have any material
relationship with us based on all relevant facts and
circumstances.
6
The Board makes independence determinations annually based on
information supplied by directors and other sources, the
Nominating/Governance Committees prior review and
recommendation, and certain categorical standards contained in
our Corporate Governance Principles. These standards are
consistent with NYSE listing standards. The Board has determined
that all non-employee directors who served during our 2009
fiscal year and all current director nominees are independent
under the Boards director independence standards.
Accordingly, Messrs. Bollenbach, Burkle, Finchem, Jastrow,
Johnson, McCaffery, Moonves, and Nogales and Ms. Lora are
independent. In addition, the Board has determined that all of
the Board Committees are entirely composed of independent
directors.
In making its independence determinations, the Board considered
radio and billboard advertising expenditures we made at market
rates with CBS Corporation (at which Mr. Moonves
serves as President and Chief Executive Officer). These
expenditures were made in the ordinary course of our business
and the business of CBS Corporation and fell well within
the categorical independence standards contained in our
Corporate Governance Principles. Mr. Moonves was deemed to
not have a direct or indirect material interest in the
expenditures, and did not participate in the transactions in an
individual capacity.
Consideration
of Director Candidates
The Nominating/Governance Committee is responsible for
identifying and evaluating director candidates based on the
perceived needs of the Board at the time made. Director
candidate identification and evaluation may occur at regular or
special meetings of the Nominating/Governance Committee and at
any point during the year. The general qualifications for
director candidates are described above under the heading
Director Qualifications, and attributes that the
Nominating/Governance Committee may consider are described above
in the box titled Selected Director Attributes.
Among other attributes, the Nominating/Governance Committee may
consider a director candidates diversity of background and
personal experience. In this context, diversity may encompass a
candidates particular race, ethnicity, national origin and
gender, geographic residency, educational and professional
history, community or public service, expertise or knowledge
base and/or
other tangible and intangible aspects of the candidates
constitution in relation to the personal characteristics of
current directors and other potential director candidates. The
Nominating/Governance Committee does not have a formal policy
specifying how diversity of background and personal experience
should be applied in identifying or evaluating director
candidates, and a candidates background and personal
experience, while important, does not necessarily outweigh other
attributes or factors the Nominating/Governance Committee may
consider in evaluating any particular candidate. A director
candidates background and personal experience, however,
will be significant in the Nominating/Governance
Committees candidate identification and evaluation process
to help ensure that the Board remains sensitive and responsive
to the needs and interests of our homebuyers and other
stakeholders. As part of its annual self-evaluation under our
Corporate Governance Principles, the Board considers whether the
level of diversity of its members is appropriate, and the
Nominating/Governance Committee takes the outcome into account
when identifying and evaluating director candidates.
The Nominating/Governance Committee has retained professional
search firms from time to time to assist it with recruiting
potential director candidates to the Board based on criteria the
Nominating/Governance Committee provides to the firm. These
firms help identify, evaluate and select director candidates and
are typically paid an agreed upon fee plus expenses for their
work. Current directors or other persons may recommend
candidates to the Nominating/Governance Committee.
Any security holder may recommend a director candidate for the
Nominating/Governance Committees consideration by
submitting the candidates name and qualifications to us in
care of the Corporate Secretary at the address listed above
under the heading Corporate Governance Highlights.
Director candidates recommended by a security holder are
considered in the same manner as any other recommended
candidates.
7
Director
Compensation
The Board sets non-employee director compensation based on
recommendations from the Compensation Committee. Mr. Mezger
is not paid for his service as a director. The Compensation
Committee has retained Semler Brossy to assist it with designing
our compensation and benefit programs, including our
non-employee director compensation program.
2003 Director
Plan
Until July 9, 2009, non-employee director compensation was
provided under our 2003 Non-Employee Directors Stock Plan
(2003 Director Plan), and each non-employee
director serving on the Board on the date of our last Annual
Meeting (April 2, 2009) received compensation under
the terms of the 2003 Director Plan. All compensation
described below under Director Compensation During Fiscal
Year 2009 was provided under the terms of the
2003 Director Plan. The key components of the
2003 Director Plan are set forth below.
|
|
|
|
|
2003 Director Plan Key Components
|
|
|
|
|
Director Year Compensation. Each non-employee director is entitled to receive:
An $80,000 cash retainer, paid in four equal quarterly installments during a Director Year; and
4,000 stock units.
|
|
A Director Year is
the period
between our annual meetings of
stockholders. The 2009 Director
Year began on April 2, 2009
and ends on March 31, 2010.
|
|
|
|
|
|
|
Committee Service-Related Compensation.
|
|
|
|
Committee Chair
Retainers: Audit Committee: 1,000 stock units; Compensation
Committee: 600 stock units; Nominating/Governance Committee: 600
stock units.
|
|
Equity Elections. Each non-employee director may elect to
receive equity-based compensation as follows:
|
|
The cash retainer in
stock units or stock options. If stock units are elected, the
number of stock units granted is equal to the number of shares
of our common stock that can be purchased based on the grant
date closing price with 120% of the retainers value. If
stock options are elected, the number of stock options granted
is four times the shares of our common stock that can be
purchased based on the grant date closing price with the
retainers value.
|
|
Stock unit awards in
stock options, with the amount granted equal to four times the
number of stock units.
|
|
Description of 2003 Director Plan Stock Units and Stock
Options.
|
|
Granted on the date of
each annual stockholders meeting. 2003 Director Plan stock
options have an exercise price equal to our common stocks
closing price on that date.
|
|
Each
2003 Director Plan stock unit is a right to receive the
fair market value of a share of our common stock and a payment
at the same time and in the same amount as any cash dividend
paid on our common stock. Each stock option granted under the
2003 Director Plan is fully vested at grant and has a
15-year
term. A non-employee director cannot exercise 2003 Director
Plan stock options until the earlier of (a) meeting the
non-employee director stock ownership requirement and
(b) the date the director leaves the Board.
2003 Director Plan stock options must be exercised within
one year of the date a non-employee director leaves the Board.
|
|
Based on each
non-employee directors compensation election,
2003 Director Plan stock units and stock options will be
paid out in cash only. For 2003 Director Plan stock units,
the amount paid is equal to the total number of stock units held
multiplied by our common stocks closing price on the date
a non-employee director leaves the Board. For 2003 Director
Plan stock options, the amount paid is equal to the positive
difference between a stock options exercise price and the
closing price of our common stock on the applicable exercise
date. Accordingly, 2003 Director Plan stock options are
similar in nature to stock appreciation rights.
|
|
|
|
8
2009 Director
Plan
On July 9, 2009, the Board adopted a new non-employee
director compensation program the 2009 Non-Employee
Directors Compensation Plan (2009 Director
Plan). The terms of the 2009 Director Plan are filed
as an exhibit to our Annual Report. Similar to the
2003 Director Plan, the 2009 Director Plan provides
non-employee directors with an annual retainer and equity-based
compensation composed of stock options and stock units. The
2009 Director Plan also provides retainers for Board
Committee Chairs and for Board Committee members, and meeting
fees payable for attendance at Board or Board Committee
meetings, beginning on the third additional meeting of the Board
or of a Board Committee above its number of regularly scheduled
meetings, subject to approval by the Non-Executive Chairman of
the Board (as to Board meetings) or the relevant Board Committee
Chair (as to Board Committee meetings). The Non-Executive
Chairman of the Board is not eligible for any Board
Committee-related retainers.
Under the 2009 Director Plan, non-employee directors may
elect to receive cash retainers and meeting fees in the form of
stock units. 2009 Director Plan stock units and stock
options vest one year after the date of grant, and stock options
have a
10-year
term. A non-employee director cannot exercise vested
2009 Director Plan stock options until the director has met
the non-employee director stock ownership requirement or, if
earlier, has left the Board. A non-employee director can elect
to receive payout of 2009 Director Plan stock units upon
leaving the Board or, if the director has met the non-employee
director stock ownership requirement, immediately after the
one-year vesting date or at a specified date after the stock
units vest, but before the director leaves the Board. The
non-employee director stock ownership requirement is described
below under the heading Stock Ownership
Requirements. Stock options and stock units granted under
the 2009 Director Plan are settled in cash unless payment
in shares of our common stock is approved by our stockholders.
As of the date of this Proxy Statement, no compensation has been
provided to our non-employee directors under the
2009 Director Plan. The Board has established the following
compensation under the 2009 Director Plan for the
2010 Director Year: (a) an $80,000 annual retainer;
(b) a grant of stock options and stock units, with each
valued at $67,500 on the date of grant; (c) Board Committee
Chair retainers of $25,000 (Audit Committee), $18,000
(Compensation Committee) and $10,000 (Nominating/Governance
Committee); (d) Board Committee member retainers of $10,000
(Audit Committee), $7,000 (Compensation Committee) and $5,000
(Nominating/Committee); and (e) meeting fees, if any, of
$1,500 per eligible meeting. The differences between the various
Board Committee Chair retainers and Board Committee member
retainers reflect the Boards judgment of each Board
Committees respective workload.
Chairman
Retainer
Mr. Bollenbach is paid an additional annual cash retainer
of $300,000 for his service as the Non-Executive Chairman of the
Board. He may keep any retainer payment if removed from the
Board without cause.
Expenses
We pay the non-employee directors expenses, including
travel, accommodations and meals, for attending Board and Board
Committee meetings and our annual stockholders meetings and any
other activities related to our business.
9
Director
Compensation During Fiscal Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or Paid
|
|
|
Stock
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
|
|
in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
Name
|
|
|
($)(a)
|
|
|
($)(b)
|
|
|
($)(b)
|
|
|
($)(c)
|
|
|
($)
|
Mr. Bollenbach
|
|
|
$
|
300,000
|
|
|
|
$
|
0
|
|
|
|
$
|
422,136
|
|
|
|
$
|
0
|
|
|
|
$
|
722,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Burkle
|
|
|
|
30,567
|
|
|
|
|
161,057
|
|
|
|
|
430,311
|
|
|
|
|
0
|
|
|
|
|
621,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Finchem
|
|
|
|
7,177
|
|
|
|
|
183,460
|
|
|
|
|
0
|
|
|
|
|
16,390
|
|
|
|
|
207,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Jastrow
|
|
|
|
13,192
|
|
|
|
|
229,659
|
|
|
|
|
0
|
|
|
|
|
13,545
|
|
|
|
|
256,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Johnson
|
|
|
|
1,895
|
|
|
|
|
14,550
|
|
|
|
|
317,621
|
|
|
|
|
0
|
|
|
|
|
334,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Lora
|
|
|
|
9,157
|
|
|
|
|
214,807
|
|
|
|
|
23,674
|
|
|
|
|
0
|
|
|
|
|
247,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. McCaffery
|
|
|
|
4,392
|
|
|
|
|
33,731
|
|
|
|
|
475,117
|
|
|
|
|
13,545
|
|
|
|
|
526,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Moonves
|
|
|
|
9,011
|
|
|
|
|
204,811
|
|
|
|
|
38,824
|
|
|
|
|
16,390
|
|
|
|
|
269,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Nogales
|
|
|
|
76,753
|
|
|
|
|
177,105
|
|
|
|
|
5,772
|
|
|
|
|
0
|
|
|
|
|
259,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Fees Earned or Paid in Cash: Except for
Messrs. Bollenbach, Burkle and Nogales, these amounts are
the total 2003 Director Plan stock unit dividend equivalent
payments made during our 2009 fiscal year. Non-employee
directors with larger stock unit holdings based on their tenure
and compensation elections received greater dividend equivalent
payments. The amount shown for Mr. Bollenbach is solely his
Non-Executive Chairman retainer. The amount shown for each of
Messrs. Burkle and Nogales includes annual cash retainer
payments. |
|
(b) |
|
Stock and Option Awards: These amounts are the aggregate
compensation expense we recognized in our 2009 fiscal year for
2003 Director Plan stock unit and stock option awards,
respectively, computed in accordance with Accounting Standards
Codification Topic No. 718, Compensation
Stock Compensation (ASC 718), except that, in
accordance with applicable SEC rules and guidance, we have
disregarded estimates of forfeitures related to service-based
vesting conditions. Information used in determining these
amounts can be found in Note 18. Employee Benefit and Stock
Plans in the Notes to Consolidated Financial Statements
contained in our Annual Report. The stock units and stock
options were granted on April 2, 2009. Below are the
amounts and corresponding grant date fair value of the stock
units and stock options granted to each non-employee director in
our 2009 fiscal year per the directors election and the
corresponding grant date fair value computed in accordance with
ASC 718. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date Fair
|
|
|
|
Stock Units
|
|
|
Stock Options
|
|
|
Value
|
Name
|
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
Mr. Bollenbach
|
|
|
0
|
|
|
37,993
|
|
|
$339,657
|
|
|
|
|
|
|
|
|
|
|
Mr. Burkle
|
|
|
6,598
|
|
|
16,000
|
|
|
239,041
|
|
|
|
|
|
|
|
|
|
|
Mr. Finchem
|
|
|
10,598
|
|
|
0
|
|
|
154,201
|
|
|
|
|
|
|
|
|
|
|
Mr. Jastrow
|
|
|
10,598
|
|
|
0
|
|
|
154,201
|
|
|
|
|
|
|
|
|
|
|
Mr. Johnson
|
|
|
0
|
|
|
37,993
|
|
|
339,657
|
|
|
|
|
|
|
|
|
|
|
Ms. Lora
|
|
|
11,598
|
|
|
0
|
|
|
168,751
|
|
|
|
|
|
|
|
|
|
|
Mr. McCaffery
|
|
|
0
|
|
|
40,393
|
|
|
361,113
|
|
|
|
|
|
|
|
|
|
|
Mr. Moonves
|
|
|
11,198
|
|
|
0
|
|
|
162,931
|
|
|
|
|
|
|
|
|
|
|
Mr. Nogales
|
|
|
4,000
|
|
|
0
|
|
|
58,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Lora received an additional 1,000 stock units for her
service as Audit Committee Chair. Mr. McCaffery received
2,400 stock options for his service as Compensation Committee
Chair by electing to receive his 600 stock unit Chair retainer
grant in 2003 Director Plan stock options. Mr. Moonves
received an additional 600 stock units for his service as
Nominating/Governance Committee Chair. All other stock unit and |
10
|
|
|
|
|
stock option amounts reflect the 2003 Director Plan cash
retainer and stock unit grant the non-employee directors elected
to receive in 2003 Director Plan stock units or, for
Messrs. Bollenbach, Burkle, Johnson and McCaffery, in
2003 Director Plan stock options. |
Listed below are each non-employee directors total
2003 Director Plan stock unit and stock option holdings as
of February 26, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Stock Units
|
|
|
Stock Options
|
|
|
Holdings
|
Name
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
Mr. Bollenbach
|
|
|
0
|
|
|
88,753
|
|
|
88,753
|
|
|
|
|
|
|
|
|
|
|
Mr. Burkle
|
|
|
43,918
|
|
|
181,155
|
|
|
225,073
|
|
|
|
|
|
|
|
|
|
|
Mr. Finchem
|
|
|
31,357
|
|
|
0
|
|
|
31,357
|
|
|
|
|
|
|
|
|
|
|
Mr. Jastrow
|
|
|
55,419
|
|
|
0
|
|
|
55,419
|
|
|
|
|
|
|
|
|
|
|
Mr. Johnson
|
|
|
7,578
|
|
|
37,993
|
|
|
45,571
|
|
|
|
|
|
|
|
|
|
|
Ms. Lora
|
|
|
39,609
|
|
|
11,220
|
|
|
50,829
|
|
|
|
|
|
|
|
|
|
|
Mr. McCaffery
|
|
|
17,568
|
|
|
114,002
|
|
|
131,570
|
|
|
|
|
|
|
|
|
|
|
Mr. Moonves
|
|
|
38,843
|
|
|
18,400
|
|
|
57,243
|
|
|
|
|
|
|
|
|
|
|
Mr. Nogales
|
|
|
68,013
|
|
|
2,130
|
|
|
70,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
All Other Compensation: These amounts are the premium
payments for the life insurance policies we maintain to fund
charitable donations under the Directors Legacy Program,
which is described below under the heading Directors
Legacy Program. Messrs. Bollenbach and Johnson do not
participate in the program. No additional premium payments are
currently required for the program donations for each of
Messrs. Burkle and Nogales. In our 2009 fiscal year, we
paid a total of $59,869 in life insurance premiums for all
participants, including former directors. Premium payments vary
depending on participants respective ages and other
factors. The total dollar amount payable under the program at
November 30, 2009 was $15.9 million. If all current
participating directors were vested in the full donation amount,
the total dollar amount payable under the program at
November 30, 2009 would have been $16.1 million. |
Directors Legacy Program. We established a
Directors Legacy Program in 1995 to recognize our and our
directors interests in supporting worthy educational
institutions and other charitable organizations. In making
adjustments to our philanthropic activities, the Board elected
in 2007 to close the program to new participants.
Messrs. Bollenbach, Johnson and Mezger do not participate
in the program. Under the program, we will make a charitable
donation on each participating directors behalf of up to
$1,000,000. Directors vest in the full donation in five equal
annual installments of $200,000, and therefore must serve on the
Board for five consecutive years to donate the maximum amount. A
participating director may allocate the donation to up to five
qualifying institutions or organizations. Donations are paid in
ten equal annual installments directly to designated
organizations after a participating directors death with
proceeds from the life insurance policies we maintain on each
participating directors life. Participating directors and
their families do not receive any proceeds, compensation or tax
savings associated with the program.
11
Items of
Business
Proposal 1:
Election
of Directors
u
At the Annual Meeting, the Board will present as nominees and
recommend to stockholders that Messrs. Bollenbach, Finchem,
Jastrow, Johnson, McCaffery, Mezger, Moonves and Nogales and
Ms. Lora each be elected as a director to serve for a
one-year term ending at our 2011 Annual Meeting of Stockholders.
Each nominee is currently a director, has consented to being
nominated and has agreed to serve as a director if elected. Each
nominee is standing for re-election. Should any of these
nominees become unable to serve as a director prior to the
Annual Meeting, the persons named as proxies on the proxy cards
for the Annual Meeting will, unless otherwise directed, vote for
the election of such other person as the Board may recommend in
place of such nominee.
Mr. Burkle has decided to not seek re-election and will retire
from the Board effective as of the date of the Annual Meeting,
when his current term as a director expires. On the date of the
Annual Meeting, following the election of directors, the Board
will have nine members.
Vote
Required
Under our By-laws, the election of each director nominee will
require a majority of votes cast at the Annual Meeting to be in
favor of the nominee (i.e., the votes cast for a
nominees election must exceed the votes cast against the
nominees election).
Consistent with this director election standard, our Corporate
Governance Principles require that each director nominee in an
uncontested election at an annual meeting of stockholders
receive more votes cast for than against his or her election or
re-election in order to be elected or re-elected to the Board.
An uncontested election is one in which no director
candidates on the ballot were nominated by a stockholder in
accordance with our By-laws. This election is an uncontested
election.
Our Corporate Governance Principles also provide that a director
nominee who fails to win election or re-election to the Board in
an uncontested election is expected to tender his or her
resignation from the Board. If an incumbent director fails to
receive the required vote for election or re-election in an
uncontested election, the Nominating/Governance Committee will
act promptly to determine whether to accept the directors
resignation and will submit its recommendation for consideration
by the Board. The Board expects the director whose resignation
is under consideration to abstain from participating in any
decision regarding that resignation. The Nominating/Governance
Committee and the Board may consider any factors they deem
relevant in deciding whether to accept a directors
resignation.
Your
Board recommends a vote FOR the election to the Board of each of
the nominees.
12
A brief summary of each current directors and director
nominees principal occupation, recent professional
experience, certain specific qualifications identified as part
of the Boards determination that each such individual
should serve on the Board, and directorships at other public
companies for at least the past five years, if any, is provided
below.
|
|
|
|
|
Stephen F. Bollenbach, age 67, is our Non-Executive
Chairman of the Board. He was the Co-Chairman and Chief
Executive Officer of Hilton Hotels Corporation, a hotel
developer and operator, positions he held from May 2004 and
February 1996, respectively. He retired from Hilton in October
of 2007. Prior to joining Hilton, Mr. Bollenbach was Senior
Executive Vice President and Chief Financial Officer for The
Walt Disney Company from 1995 to 1996. Before Disney,
Mr. Bollenbach was President and Chief Executive Officer of
Host Marriott Corporation from 1993 to 1995, and served as Chief
Financial Officer of Marriott Corporation from 1992 to 1993.
From 1990 to 1992, Mr. Bollenbach was Chief Financial
Officer of the Trump Organization. Mr. Bollenbach serves as
a director of Time Warner Inc. and Macys, Inc. He
previously served as a director of American International Group
Inc., Harrahs Entertainment, Inc., Caesars Entertainment,
Inc. and Catellus Development Corporation. Mr. Bollenbach
joined the Board as Non-Executive Chairman in 2007.
Mr. Bollenbach has several years of experience and
expertise as a senior corporate executive and public company
board member, including as a lead independent director, and has
demonstrated exemplary leadership as Non-Executive Chairman of
the Board.
|
|
|
|
|
|
Timothy W. Finchem, age 62, has been Commissioner of
the PGA TOUR, Inc., a membership organization for professional
golfers, since 1994. He joined the TOUR staff as Vice President
of Business Affairs in 1987, and was promoted to Deputy
Commissioner and Chief Operating Officer in 1989.
Mr. Finchem served in the White House as Deputy Advisor to
the President in the Office of Economic Affairs in 1978 and
1979, and in the early 1980s, co-founded the National
Marketing and Strategies Group in Washington, D.C. He joined the
Board in 2005. Mr. Finchem has demonstrated success in
broadening the popularity of professional golf among the
demographic groups that make up our core homebuyers, and has
experience in residential community development. He also has a
substantial presence in Florida, one of our key markets.
|
|
|
|
|
|
Kenneth M. Jastrow, II, age 62, is
Non-Executive Chairman, Forestar Group Inc., a real estate and
natural resources company. He served as Chairman and Chief
Executive Officer of Temple-Inland Inc., a manufacturing company
and the former parent of Forestar Group, from 2000 to 2007.
Prior to that, Mr. Jastrow served as President and Chief
Operating Officer in 1998 and 1999, Group Vice President from
1995 until 1998, and as Chief Financial Officer of Temple-Inland
from November 1991 until 1999. Mr. Jastrow is also a
director of MGIC Investment Corporation. He previously served as
a director of Guaranty Financial Group Inc. He joined the Board
in 2001. Mr. Jastrow has several years of experience and
leadership in the building products, real estate and mortgage
lending industries, providing critical perspective in businesses
that impact the homebuilding industry, and on sustainability
practices. He also has a substantial presence in Texas, a key
market for us.
|
13
|
|
|
|
|
Robert L. Johnson, age 63, is founder and chairman
of The RLJ Companies, an innovative business network that owns
or holds interests in a diverse portfolio of companies in the
banking, private equity, real estate, hospitality, professional
sports, film production, gaming, and automobile dealership
industries. Prior to forming The RLJ Companies, Mr. Johnson
was founder and chief executive officer of Black Entertainment
Television (BET), which was acquired by Viacom Inc. in 2001. He
continued to serve as chief executive officer of BET until 2006.
In July 2007, Mr. Johnson was named by USA Today as
one of the 25 most influential business leaders of the past
25 years. Mr. Johnson currently serves on the board of
directors of the Lowes Companies, Inc., IMG Worldwide,
Inc., and Strayer Education, Inc. He previously served as a
director of Hilton Hotels Corporation, US Airways Group, Inc.
and General Mills, Inc. He joined the Board in 2008.
Mr. Johnson has significant experience in real estate,
finance, mortgage banking and brand-building enterprises and a
unique and diverse background in a number of industry sectors.
He also has a substantial presence in the Washington D.C. and
mid-Atlantic region, where we have recently resumed operations
and that we believe will be an important market for us.
|
|
|
|
|
|
Melissa Lora, age 47, has since 2001 been the Chief
Financial Officer of Taco Bell Corp., a quick service restaurant
chain. Ms. Lora joined Taco Bell Corp. in 1987 and has held
various positions throughout the company, most recently acting
as Regional Vice President and General Manager from 1998 to 2000
for Taco Bells operations throughout the Northeastern
United States. She joined the Board in 2004. Ms. Lora has
strong knowledge of and substantial experience and expertise in
financial matters as well as in managing real estate assets. She
has made significant contributions to the work of the Audit
Committee since joining the Board and continues to so as its
Chair.
|
|
|
|
|
|
Michael G. McCaffery, age 56, is the Chief Executive
Officer of Makena Capital Management, an investment management
firm. From 2000 to 2006, Mr. McCaffery was President and
CEO of the Stanford Management Company (SMC), which was
established in 1991 to manage Stanford Universitys
financial and real estate investments. Previous to joining SMC,
Mr. McCaffery was President and Chief Executive Officer of
Robertson Stephens Investment Bankers from January 1993 to
December 1999, and also served as Chairman from January 2000 to
December 2000. Mr. McCaffery is a director of Thomas Weisel
Partners Group, Inc. and Venture Lending & Leasing V
Inc. He previously served as a director of Venture
Lending & Leasing IV Inc., Venture
Lending & Leasing III Inc., and as a Trustee of
RS Investment Trust. He joined the Board in 2003.
Mr. McCaffery has a broad array of business experience and
recognized expertise in financial matters and real estate
investing, as well as a demonstrated commitment to good
corporate governance.
|
|
|
|
|
|
Jeffrey T. Mezger, age 54, has been our President
and Chief Executive Officer since November 2006. Prior to
becoming President and Chief Executive Officer, Mr. Mezger
served as our Executive Vice President and Chief Operating
Officer, a position he assumed in 1999. From 1995 until 1999,
Mr. Mezger held a number of executive posts in our
southwest region, including Division President, Phoenix
Division, and Senior Vice President and Regional General Manager
over Arizona and Nevada. Mr. Mezger joined us in 1993 as
president of the Antelope Valley Division in Southern
California. He joined the Board in 2006. As our CEO,
Mr. Mezger has demonstrated dedicated and effective
leadership, and possesses a unique insight and understanding, of
our operations and business strategy.
|
14
|
|
|
|
|
Leslie Moonves, age 60, is President and Chief
Executive Officer and a Director of CBS Corporation, a mass
media company. Prior to that, he was Co-President and Co-Chief
Operating Officer of Viacom, a mass media company and the former
parent of CBS, which title he held from June 2004 to December
2005. Mr. Moonves previously served as President and Chief
Executive Officer of CBS from 1998 to 2004, and served as its
Chairman from 2003 to 2005. He joined CBS in 1995 as President,
CBS Entertainment. Prior to that, Mr. Moonves was President
of Warner Bros. Television from 1993, when Warner Bros. and
Lorimar Television combined operations. From 1989 to 1993, he
was President of Lorimar Television. He previously served as a
director of Viacom Inc. and Westwood One, Inc. He joined the
Board in 2004. Mr. Moonves has intimate knowledge of and
insight on how to capitalize on trends among, and substantial
experience in nationwide marketing to, our target homebuyer
demographic.
|
|
|
|
|
|
Luis G. Nogales, age 66, has been the Managing
Partner of Nogales Investors, LLC, a private equity investment
firm, since 2001. He was Chairman and Chief Executive Officer of
Embarcadero Media, Inc. from 1992 to 1997, President of
Univision Communications, Inc., from 1986 to 1988, and Chairman
and Chief Executive Officer of United Press International from
1983 to 1986. He is a director of Southern California Edison
Co., Edison International and Arbitron Inc. He joined the Board
in 1995. Mr. Nogales has substantial depth of experience in
media and marketing enterprises and with business operations
management and financial investments drawn from a diverse
background in an array of industries. His long-time service on
the Board has provided critical knowledge of our operations and
corporate history.
|
15
Proposal 2:
Ratification
of Appointment of Independent Registered Public Accounting
Firm
u
The Audit Committee has appointed Ernst & Young LLP as
our independent registered public accounting firm to audit our
consolidated financial statements for our fiscal year ending
November 30, 2010. During our 2009 fiscal year,
Ernst & Young LLP served as our independent registered
public accounting firm and also provided certain other
audit-related services, as further discussed below under the
heading Independent Auditor Fees and Services.
Representatives of Ernst & Young LLP are expected to
attend the Annual Meeting, be available to respond to
appropriate questions and, if they desire, make a statement.
Although we are not required to do so, we are seeking
stockholder ratification of Ernst & Young LLPs
appointment as our independent registered public accounting firm
as a matter of good corporate governance. If Ernst &
Young LLPs appointment is not ratified, the Audit
Committee will reconsider whether to retain Ernst &
Young LLP, but still may retain them. Even if the appointment is
ratified, the Audit Committee, in its discretion, may change the
appointment at any time during the year if it determines that
such a change would be in our and our stockholders best
interests.
Vote
Required
Approval of the ratification of the appointment of
Ernst & Young LLP as our independent registered public
accounting firm for our fiscal year ending November 30,
2010 requires the affirmative vote of the majority of shares of
common stock present or represented, and entitled to vote
thereon, at the Annual Meeting.
Your
Board recommends a vote FOR the ratification of the appointment
of Ernst & Young LLP as our independent registered
public accounting firm for our fiscal year ending
November 30, 2010.
16
Proposal 3:
Approve
the KB Home 2010 Equity Incentive Plan
u
We are asking for approval of the KB Home 2010 Equity Incentive
Plan (the 2010 Plan), which will allow us to grant
equity-based compensation to our employees, consultants and
non-employee directors. Upon approval of the 2010 Plan by our
stockholders, no further awards will be made under our 2001
Stock Incentive Plan (the 2001 Plan), which is
currently our only active equity compensation plan. The 2001
Plan will otherwise expire in accordance with its terms on
April 5, 2011.
The 2010 Plan is being submitted to a vote of the stockholders
in order to comply with NYSE rules and to allow us to deduct for
federal income tax purposes the performance-based
compensation that is paid under the 2010 Plan, as
permitted by Section 162(m) of the Code. Stockholder
approval will also allow us to grant incentive stock options
under the 2010 Plan.
A copy of the 2010 Plan can be found in the accompanying
Attachment A, and the following summary of the 2010 Plans
material terms is qualified in its entirety by reference to the
full text. Stockholders are urged to read the full 2010 Plan as
set forth in Attachment A.
Summary
of the 2010 Plan
The purpose of the 2010 Plan is to attract, motivate and retain
the services of employees, consultants and non-employee
directors by enabling them to participate in our growth and
financial success through the ownership of equity-based awards,
and to align their individual interests to those of our
stockholders. The 2010 Plan will become effective only upon
approval by our stockholders.
Size of the Share Pool. The 2010 Plan authorizes the
issuance of 3,500,000 shares of our common stock. This
includes the unused capacity that will be rolled-over from the
2001 Plan and that will become subject to the terms of the 2010
Plan. This pool of shares may be used for all types of awards
under a fungible pool formula. This formula provides that the
authorized share limit will be reduced by (a) one share for
every one share subject to a stock option, stock appreciation
right (SAR) or other similar award, and
(b) 1.78 shares for every one share subject to a
restricted stock award or other similar full-value
awards.
Key Terms. The 2010 Plan authorizes the Compensation
Committee (or, if our Board determines, another committee of
independent directors of the Board, which in either case we will
refer to in this proposal as the Committee) to grant
awards and otherwise administer and interpret the 2010 Plan, and
any award agreements and general programs adopted thereunder.
The 2010 Plan also incorporates a broad range of other leading
compensation and governance terms, including the following:
|
|
|
|
|
No Repricings Without Stockholder Approval. The 2010 Plan
prohibits, without stockholder approval, both the amendment of
any stock option or SAR to reduce its exercise price and the
cancellation of a stock option or SAR in exchange for cash or
for any other award that has a lower exercise price or that
provides additional value to the holder of a stock option or SAR
award.
|
|
|
|
No
In-the-Money
Grants. The 2010 Plan prohibits the grant of stock options
or SARs with an exercise price less than the fair market value
of a share of our common stock on the date of grant.
|
|
|
|
Limited Delegation. The Committee may only delegate
administrative actions under the 2010 Plan to our officers, and
in no event may any officer be delegated the authority to grant
or amend awards.
|
|
|
|
Minimum Vesting Requirements. The minimum time-based
vesting requirement for performance-based awards is one year,
and non-performance-based awards are generally subject to a
three year vesting period. The Committee may provide for an
equal portion of a non-performance-based award to vest in annual
installments during this vesting period. In addition, the 2010
Plan only permits the Committee to accelerate the vesting of an
award in the event of a holders death, disability or
retirement (though only as to employee holders), or upon a
change in control.
|
|
|
|
Reissuance Restrictions. Shares that are tendered or
withheld to satisfy the exercise price of an award or to cover
tax withholding obligations may not be used again for new grants.
|
|
|
|
Limitations on Grants. The maximum number of shares with
respect to which one or more awards may be granted to any one
person in a given year is 1,000,000. The maximum amount of cash
that
|
17
|
|
|
|
|
may be paid to any one person in a given year with respect to
one or more performance-based awards is $5,000,000.
|
Eligibility. All employees, non-employee directors and
consultants of KB Home and its affiliates are eligible to
receive awards under the 2010 Plan, as determined by the
Committee or the Board. As of the date of this proxy statement,
we have nine non-employee directors and approximately
1,000 employees and consultants who are eligible to
participate in the 2010 Plan.
Administration. Unless the Board assumes the role of the
Committee or otherwise limits the Committees authority,
the Committee has the power to make grants of awards under the
2010 Plan, to determine the types, sizes, price, timing and
vesting restrictions of awards, and to administer and interpret
the 2010 Plan. The Committee shall also have the limited power
to delegate certain of its powers and responsibilities under the
2010 Plan, subject to the restrictions described above, and only
to the extent consistent with our equity-based award grant
policy (as described below under the heading Equity-Based
Award Grant Policy) and applicable law.
Types of Awards. The 2010 Plan authorizes the grant of
stock options, shares of restricted stock, SARs, restricted
stock units, stock payments and general performance-based
awards. Following is a brief description of each type of award:
|
|
|
|
|
Stock Options. Stock options provide a holder with the
right to acquire shares of our common stock for the exercise
price stated in the award. There are two kinds of stock options:
incentive stock options (as defined under Section 422 of
the Code) and nonqualified stock options. The option exercise
price of all stock options granted pursuant to the 2010 Plan
will not be less than 100% of the fair market value of a share
of our common stock on the date of grant. Stock options may vest
and become exercisable as determined by the Committee, but in no
event may a stock option have a term extending beyond the tenth
anniversary of the date of grant. In addition, incentive stock
options granted to any person who owns stock constituting more
than 10% of our total voting power shall have an exercise price
of not less than 110% of the fair market value of a share of our
common stock on the date of grant and may not have a term
extending beyond the fifth anniversary of the date of grant. The
aggregate fair market value of the shares with respect to which
incentive stock options are exercisable for the first time by an
employee in any calendar year may not exceed $100,000, or such
other amount as the Code may allow.
|
|
|
|
Restricted Stock. An award of restricted stock is a grant
of shares of our common stock that is nontransferable and
subject to forfeiture until certain conditions set forth in the
award agreement are met. Conditions may be based on continuing
service to us or achieving one or more performance goals or
other criteria or a combination of criteria. During the
restricted period, a holder of shares of restricted stock will
have full rights with respect to such shares unless otherwise
determined by the Committee, except that no dividends or
distributions shall be payable on shares of restricted stock
that are subject to the satisfaction of one or more performance
goals until such goals are met, at which time accrued but unpaid
dividends and distributions shall become payable to the holder.
|
|
|
|
SARs. SARs entitle a holder to receive an amount
determined by multiplying (a) the difference between the
fair market value of a share of our common stock on the date of
exercise and the stated exercise price by (b) the number of
shares subject to the award. Settlement of a SAR can be in cash
or shares of our common stock (or a combination of both). The
exercise price of all SARs granted pursuant to the 2010 Plan
will not be less than 100% of the fair market value of a share
of our common stock on the date of grant. SARs may vest and
become exercisable as determined by the Committee, but in no
event may a SAR have a term extending beyond the tenth
anniversary of the date of grant.
|
|
|
|
Restricted Stock Units (RSUs). RSUs provide
for the issuance to a holder of shares of our common stock or an
equivalent cash value at a future date upon the satisfaction of
specific conditions set forth in the award agreement. Conditions
may be based on continuing service to us or achieving one or
more performance goals or other criteria or a combination of
criteria. RSUs generally will be forfeited if the applicable
vesting conditions are not met. RSUs may be paid in cash, shares
of our common stock or a combination of both. A holder of RSUs
will not have any rights associated with any underlying shares
until the vesting conditions are satisfied and shares of our
common stock are actually issued.
|
18
|
|
|
|
|
Stock Payments. The 2010 Plan provides for the ability to
make a payment of shares of our common stock (or a right to
purchase shares) as part of a bonus, deferred compensation or
other arrangement.
|
|
|
|
Performance-Based Awards. These awards may be granted in
the form of cash bonus awards, stock bonus awards, performance
awards or incentive awards that are paid in cash, shares of our
common stock or a combination of both. The value of these awards
will be linked to the achievement of one or more performance
goals. In addition, the vesting or payout of any of the other
types of awards that may be granted under the 2010 Plan may be
made subject to the achievement of one or more performance goals.
|
Cancellation, Forfeiture, Expiration or Cash Settlement of
Awards. If an award expires or is canceled, forfeited or
settled for cash, then any shares subject to such award may, to
the extent of such expiration, cancellation, forfeiture or cash
settlement, be used again for new grants under the 2010 Plan.
However, as noted above, any shares tendered or withheld to
satisfy the grant or exercise price or tax withholding
obligation pursuant to any award may not be used again for new
grants. Any shares that again become available for grant will be
added back in the same manner in which they were initially
deducted (i.e.,
one-for-one
or 1.78-for-one).
Performance-Based Compensation. Awards may be granted to
employees who are covered employees under
Section 162(m) of the Code that are intended to be
performance-based compensation so as to preserve the
tax deductibility of the awards for federal income tax purposes.
These performance-based awards may be either equity or cash
awards, or a combination of both. Holders are only entitled to
receive payment for a Section 162(m) performance-based
award for any given performance period to the extent that
pre-established performance goals set by the Committee are
satisfied. These pre-established performance goals must be based
on one or more of the following performance criteria which are
the same criteria our stockholders approved last year for our
Annual Incentive Plan for Executive Officers:
|
|
|
|
|
Income/Loss (e.g., operating income/loss, EBIT or similar
measures, net income/loss, earnings/loss per share, residual or
economic earnings)
|
|
|
|
Cash Flow (e.g., operating cash flow, total cash flow,
EBITDA, cash flow in excess of cost of capital or residual cash
flow, cash flow return on investment and cash flow sufficient to
achieve financial ratios or a specified cash balance)
|
|
|
|
Returns (e.g., on revenues, investments, assets, capital
and equity)
|
|
|
|
Working Capital (e.g., working capital divided by
revenues)
|
|
|
|
Margins (e.g., variable margin, profits divided by
revenues, gross margins and margins divided by revenues)
|
|
|
|
Liquidity (e.g., total or net debt, debt reduction,
debt-to-capital,
debt-to-EBITDA
and other liquidity ratios)
|
|
|
|
Revenues, Cost Initiative and Stock Price Metrics (e.g.,
revenues, stock price, total shareholder return, expenses, cost
structure improvements and costs divided by revenues or other
metrics)
|
|
|
|
Strategic Metrics (e.g., market share, customer
satisfaction, employee satisfaction, service quality, orders,
backlog, traffic, homes delivered, cancellation rates,
productivity, operating efficiency, inventory management,
community count, goals related to acquisitions, divestitures or
other transactions and goals related to KBnxt operational
business model principles, including goals based on a
per-employee, per-home delivered or other basis)
|
With respect to particular performance-based awards, the
Committee is permitted to make certain equitable and objectively
determinable adjustments to the performance goals, provided that
any awards that are intended to qualify as
performance-based compensation must be made in
accordance with the requirements of Section 162(m) of the
Code. Upon certification of achievement of the performance goals
for a particular performance period set forth in an award that
is intended to qualify as performance-based
compensation, the Committee may reduce or eliminate, but
not increase, the amount specified in the original award.
Generally, a holder of a performance-based award must be
employed by or providing services to us throughout an applicable
performance period in order to be eligible to receive any
payment pursuant to an award that is intended to qualify as
performance-based compensation.
19
Payment Methods. Holders may satisfy any payment
obligations associated with awards with (a) cash or a
check, (b) shares of our common stock issuable pursuant to
the award or held for a sufficient period of time (and without
encumbrances) and having a fair market value equal to the
required payment, or (c) other acceptable property or legal
consideration, as determined by the Committee.
Transferability. No award may be transferred other than
to certain permitted transferees by will or the laws or descent
and distribution or, with the consent of the Committee, pursuant
to a domestic relations order.
Adjustments. Equitable adjustments to the terms of the
2010 Plan and any awards will be made as necessary to reflect
any stock splits, spin-offs, extraordinary stock dividends or
similar transactions.
Substitute Awards. The 2010 Plan provides for
substitute awards to be issued if we assume or
substitute awards under the 2010 Plan for outstanding equity
awards previously granted by another company, whether in
connection with a merger, combination, consolidation,
acquisition or other corporate transaction. Certain equitable
exceptions apply to the terms of the 2010 Plan in order to
facilitate the issuance of such awards.
Amendment and Termination. The Board or the Committee may
terminate, amend or modify the 2010 Plan. However, the
additional approval of our stockholders will be required to
(a) increase the number of shares of our common stock
available for grant, (b) reduce the exercise price of any
option or SAR, (c) cancel an option or SAR in exchange for
cash or any other award that has a lower exercise price or that
provides additional value to the holder, (d) materially
modify the requirements for eligibility to participate in the
2010 Plan, (e) materially increase the benefits accruing to
participants in the 2010 Plan, or (f) make other material
changes that require stockholder approval under applicable stock
exchange rules.
Term. No new awards may be granted under the 2010 Plan
following the tenth anniversary of its approval by our
stockholders.
Federal
Income Tax Consequences
If a holder is granted a nonqualified stock option under the
2010 Plan, the holder should not have taxable income on the
grant of the option. Generally, the holder should recognize
ordinary income at the time of exercise in an amount equal to
the fair market value of a share of our common stock at such
time, less the exercise price paid. The holders basis in
the common stock for purposes of determining gain or loss on a
subsequent sale or disposition of such shares generally will be
the fair market value of our common stock on the date the holder
exercises such option. Any subsequent gain or loss generally
will be taxable as a capital gain or loss. We generally should
be entitled to a federal income tax deduction at the time and
for the same amount as the holder recognizes ordinary income.
A holder of an incentive stock option will not recognize taxable
income upon grant. Additionally, if the applicable
employment-related requirements are met, the holder will not
recognize taxable income at the time of exercise. However, the
excess of the fair market value of our common stock received
over the option price is an item of tax preference income
potentially subject to the alternative minimum tax. If any of
the requirements for incentive stock options under the Code are
not met, the incentive stock option will be treated as a
nonqualified stock option and the tax consequences described
above for nonqualified stock options will apply. Once an
incentive stock option has been exercised, if the stock acquired
upon exercise is held for a minimum of two years from the date
of grant and one year from the date of exercise, the gain or
loss (in an amount equal to the difference between the fair
market value on the date of sale and the exercise price) upon
disposition of the stock will be treated as a long-term capital
gain or loss, and we will not be entitled to any deduction. If
the holding period requirements are not met, the excess of the
fair market value on the date of exercise over the exercise
price (less any diminution in value of the stock after exercise)
will be taxed as ordinary income and we will be entitled to a
deduction to the extent of the amount so included in the income
of the holder. Appreciation in the stock subsequent to the
exercise date will be taxed as long term or short term capital
gain, depending on whether the stock was held for more than one
year after the exercise date.
The current federal income tax consequences of other awards
authorized under the 2010 Plan generally follow certain basic
patterns: SARs are taxed and deductible in substantially the
same manner as nonqualified stock options; restricted stock
subject to a substantial risk of forfeiture results in income
recognition equal to the excess of the fair market value over
the price paid, if any, only at the time the restrictions lapse
(unless the recipient elects to accelerate recognition as of the
date of grant through an election under Section 83(b) of
the Code); RSUs, stock-based performance awards and other types
of awards are generally subject to tax at the time of payment
based on the fair market value of the award on that date.
Compensation otherwise effectively
20
deferred is taxed when paid. In each of the foregoing cases, we
will generally have a corresponding deduction at the time the
holder recognizes income, subject to Section 162(m) of the
Code with respect to covered employees.
Section 162(m) of the Code denies a deduction to any
publicly held corporation for compensation paid to covered
employees in a taxable year to the extent that compensation to
such covered employee exceeds $1,000,000. Qualified
performance-based compensation is disregarded for
purposes of the deduction limitation. The 2010 Plan has been
designed to meet the requirements of Section 162(m) of the
Code, but it is possible that compensation attributable to
awards under the 2010 Plan (when combined with all other types
of compensation received by a covered employee from us or
because of other factors) may not comply with all of the
requirements of Section 162(m) of the Code, thereby
preventing us from taking a deduction.
2010 Plan
Benefits
No determination has been made as to the types or amounts of
awards that will be granted to specific individuals under the
2010 Plan. Information on equity-based awards recently granted
under our existing plans to each of our named executive officers
is provided below under the headings Summary Compensation
Table and Grants of Plan-Based Awards During Fiscal
Year 2009. Information on equity-based awards recently
granted under our existing non-employee director compensation
plan to each of our non-employee directors is provided above
under the heading Director Compensation During Fiscal Year
2009.
Vote
Required
Approval of the 2010 Plan requires the affirmative vote of the
majority of shares of common stock present or represented, and
entitled to vote thereon, at the Annual Meeting. To meet NYSE
listing standards, however, more than 50% of the outstanding
shares of our common stock must cast a vote on this proposal.
Your Board recommends that you vote FOR this proposal to
approve the KB Home 2010 Equity Incentive Plan.
21
Proposal 4:
Stockholder
Proposal
u
The Central Laborers Pension, Welfare and Annuity Funds,
P.O. Box 1267, Jacksonville, IL 62651, the beneficial
owner of 1,470 shares of our common stock, has notified us
that it intends to present a proposal at the Annual Meeting. The
proposal is set forth below, along with the recommendation of
the Board that you vote AGAINST the proposal. We accept no
responsibility for the accuracy of the proposal or the
proponents supporting statement.
Stockholder
Proposal
RESOLVED: That the shareholders of KB Home (Company)
request that the Board of Directors Executive Compensation
Committee adopt a Pay for Superior Performance principle by
establishing an executive compensation plan for senior
executives (Plan) that does the following:
|
|
|
|
|
Sets compensation targets for the Plans annual and
long-term incentive pay components at or below the peer group
median;
|
|
|
|
Delivers a majority of the Plans target long-term
compensation through performance-vested, not simply time-vested,
equity awards;
|
|
|
|
Provides the strategic rationale and relative weightings of the
financial and non-financial performance metrics or criteria used
in the annual and performance-vested long-term incentive
components of the Plan;
|
|
|
|
Establishes performance targets for each Plan financial metric
relative to the performance of the Companys peer
companies; and
|
|
|
|
Limits payment under the annual and performance-vested long-term
incentive components of the Plan to when the Companys
performance on its selected financial performance metrics
exceeds peer group median performance.
|
Proponents
Supporting Statement
We feel it is imperative that executive compensation plans for
senior executives be designed and implemented to promote
long-term corporate value. A critical design feature of a
well-conceived executive compensation plan is a close
correlation between the level of pay and the level of corporate
performance. The
pay-for-performance
concept has received considerable attention, yet all too often
executive pay plans provide generous compensation for average or
below average performance. We believe the failure to tie
executive compensation to superior corporate performance has
fueled the escalation of executive compensation and detracted
from the goal of enhancing long-term corporate value.
We believe that the Pay for Superior Performance principle
presents a straightforward formulation for senior executive
incentive compensation that will help establish more rigorous
pay for performance features in the Companys Plan. A
strong pay and performance nexus will be established when
reasonable incentive compensation target pay levels are
established; demanding performance goals related to
strategically selected financial performance metrics are set in
comparison to peer company performance; and incentive payments
are awarded only when median peer performance is exceeded.
We believe the Companys Plan fails to promote the Pay for
Superior Performance principle in several important ways. Our
analysis of the Companys executive compensation plan
reveals the following features that do not promote the Pay for
Superior Performance principle:
|
|
|
|
|
The company does not target total compensation at any particular
level.
|
|
|
|
Substantial bonuses are paid if the company generates a pretax
loss, as long as the loss is not more than $300 million.
|
|
|
|
No awards under the companys long-term incentive plan are
performance-vested.
|
|
|
|
The company does not disclose vesting schedules for SARs or
phantom shares.
|
22
We believe a plan designed to reward superior corporate
performance relative to peer companies will help moderate
executive compensation and focus senior executives on building
sustainable long-term corporate value. We urge shareholders to
vote FOR our proposal.
Recommendation
of the Board AGAINST the Proposal
Your Board recommends a vote AGAINST this proposal, which
stockholders rejected by significant margins at both the 2008
annual meeting and the 2009 annual meeting. Your Board continues
to believe that the proposal does NOT establish a
pay-for-performance
plan and, therefore, it does not serve the best interests of KB
Home or its stockholders.
Your Board shares the proponents view that executive
incentive compensation should appropriately reward performance
that creates and sustains enterprise and stockholder value, and
believes that KB Homes current executive compensation
philosophy and programs reflect an appropriate
pay-for-performance
orientation. These are discussed in detail below under the
heading Compensation Discussion and Analysis.
By requiring KB Home to set incentive compensation targets
at or below peer group median, however, your Board
believes implementing this proposal would seriously undermine
incentive pays role in promoting value creation for KB
Homes stockholders. Your Board also believes
implementation of the proposal would severely impair KB
Homes ability to attract, motivate and retain high-caliber
executive talent. Offering only average or below-average pay for
delivering above-average results is extremely unlikely to
provide an incentive for an individual to join or stay with KB
Home, or motivate them to deliver superior results. This is
particularly true in the current difficult operating environment
for the homebuilding industry.
Your Board continues to believe this proposal fails to
accomplish what its proponent asserts is a critical design
feature of a well-conceived executive compensation
plan a close correlation between the
level of pay and the level of corporate performance. In
our view, limiting incentive compensation to a level below the
level of performance required to earn it actually creates an
unhealthy disconnect between pay and performance. Therefore,
your Board believes the executive compensation approach in this
proposal is clearly not well-conceived based on the
proponents own standards.
Your Board believes that KB Homes current executive
compensation programs and practices, as further discussed below
under the heading Compensation Discussion and
Analysis, provide primarily performance-based pay
consistent with the proponents compensation
principle, while enabling KB Home to remain
competitive in attracting, motivating and retaining quality
executive talent and a solid management team. As a result, your
Board does not believe that adopting this proposal is necessary
or desirable for KB Home or its stockholders.
Vote
Required
Approval of this stockholder proposal requires the affirmative
vote of the majority of shares of common stock present or
represented, and entitled to vote thereon, at the Annual
Meeting. However, the proposal is a request to the Board to
consider a matter. If the proposal passes, the Board may
consider, in its business judgment, whether to take the
requested action or not, but it is not legally obligated to do
so.
Your Board recommends that you vote AGAINST this proposal.
23
Proposal 5:
Stockholder
Proposal
u
The New York City Employees Retirement System, the New
York City Teachers Retirement System and the New York City
Police Pension Fund, collectively the beneficial owners of
185,194 shares of our common stock, have notified us that
they intend to present a proposal at the Annual Meeting. The
proposal is set forth below, along with the recommendation of
the Board that you vote AGAINST the proposal. We accept no
responsibility for the accuracy of the proposal or the
proponents supporting statement.
Stockholder
Proposal
RESOLVED the shareholders of KB Home recommend that
the board of directors adopt a policy requiring that the proxy
statement for each annual meeting contain a proposal, submitted
by and supported by Company Management, seeking an advisory vote
of shareholders to ratify and approve the board
Compensations Committee Report and the executive
compensation policies and practices set forth in the
Companys Compensation Discussion and Analysis.
Proponents
Supporting Statement
Investors are increasingly concerned about mushrooming executive
compensation especially when it is insufficiently linked to
performance. In 2009, shareholders filed close to 100 Say
on Pay resolutions. Votes on these resolutions averaged
more than 46% in favor, and more than 20 companies had
votes over 50%, demonstrating strong shareholder support for
this reform.
Investor, public and legislative concerns about executive
compensation have reached new levels of intensity. A 2009 report
by The Conference Board Task Force on Executive Compensation,
noting that pay has become a flashpoint, recommends taking
immediate and credible action in order to restore trust in
the ability of boards to oversee executive compensation
and calls for compensation programs which are transparent,
understandable and effectively communicated to
shareholders.
An Advisory Vote establishes an annual referendum process for
shareholders about senior executive compensation. We believe
this vote would provide our board and management useful
information about shareholder views on the companys senior
executive compensation especially when tied to an innovative
investor communication program.
Over 25 companies have agreed to an Advisory Vote,
including Apple, Ingersoll Rand, Microsoft, Occidental
Petroleum, Hewlett-Packard, Intel, Verizon, MBIA and PG&E.
And nearly 300 TARP participants implemented the Advisory Vote
in 2009, providing an opportunity to see it in action.
Influential proxy voting service RiskMetrics Group, recommends
votes in favor, noting: RiskMetrics encourages companies
to allow shareholders to express their opinions of executive
compensation practices by establishing an annual referendum
process. An advisory vote on executive compensation is another
step forward in enhancing board accountability.
A bill mandating annual advisory votes passed the House of
Representatives, and similar legislation is expected to pass in
the Senate. However, we believe companies should demonstrate
leadership and proactively adopt this reform before the law
requires it.
We believe existing SEC rules and stock exchange listing
standards do not provide shareholders with sufficient mechanisms
for providing input to boards on senior executive compensation.
In contrast, in the United Kingdom, public companies allow
shareholders to cast a vote on the directors
remuneration report, which discloses executive
compensation. Such a vote isnt binding, but gives
shareholders a clear voice that could help shape senior
executive compensation.
We believe voting against the election of Board members to send
a message about executive compensation is a blunt, sledgehammer
approach, whereas an Advisory Vote provides shareowners a more
effective instrument.
24
We believe that a company that has a clearly explained
compensation philosophy and metrics, reasonably links pay to
performance, and communicates effectively to investors would
find a management sponsored Advisory Vote a helpful tool.
Recommendation
of the Board AGAINST the Proposal
Your Board recognizes the importance of communicating with
stockholders about executive pay. Because your Board believes
this proposal would not enhance its interaction with
stockholders, however, it recommends a vote AGAINST the
proposal, which stockholders rejected at KB Homes 2009
annual meeting.
Your Board takes stockholders views seriously and is
committed to maintaining an open dialogue on KB Homes
business and affairs. In the past few years, your Board has
adopted a number of corporate governance reforms in response to
sound stockholder suggestions and as best practices. It has also
enhanced the transparency of corporate governance processes and
decision-making. For example, your Board believes the
Compensation Discussion and Analysis below provides
a considerable amount of information on KB Homes executive
pay philosophy, programs and determinations, and on the
Boards oversight of those subjects.
Stockholders have many ways to communicate directly to the Board
and to management their specific ideas or concerns regarding
executive pay or other matters. These include contacting the
Board, the Compensation Committee,
and/or
individual directors through the Corporate Secretary, as
described above under the heading Corporate Governance
Highlights, and contacting KB Homes investor
relations professionals. Your Board believes these are effective
channels for stockholders to fully express their views on
executive pay or corporate governance.
As with last years proposal, the proponents do not explain
how the proposed advisory vote would specifically benefit KB
Home and its stockholders over current communication channels or
otherwise strengthen KB Homes corporate governance or the
Boards oversight of executive pay. After careful
consideration, your Board believes the proposed
up-or-down
advisory vote would not be helpful because it would not provide
useful information or actionable feedback. In addition, compared
to the ways stockholders may currently communicate with the
Board, your Board believes the proposed advisory vote (if
adopted) could actually hinder constructive dialogue with
stockholders about executive pay.
The outcome of an advisory vote would not identify the
particular aspects of executive pay that stockholders like or
dont like, nor specify what should be changed, if
anything. It would also not provide any information on why
stockholders voted for or against the
Compensation Committees Report and the executive
compensation policies and practices set forth in the
Compensation Discussion and Analysis. Without knowing the
reasons for a particular outcome or having any way to assess the
likely diverse, and possibly conflicting, stockholder
preferences and motivations, your Board could not, consistent
with its fiduciary duties to all stockholders, effectively
respond to stockholders who voted one way or the other.
Accordingly, your Board believes the proposed advisory vote
would not help it or the Compensation Committee carry out their
executive pay oversight role or improve KB Homes corporate
governance.
Moreover, given the significant legislative and regulatory
momentum to establish a mandatory advisory vote for all
U.S. public companies, your Board believes it is prudent
and in the best interests of stockholders to evaluate adopting
an advisory vote mechanism when definitive rules are established.
Vote
Required
Approval of this stockholder proposal requires the affirmative
vote of the majority of shares of common stock present or
represented, and entitled to vote thereon, at the Annual
Meeting. However, the proposal is a request to the Board to
consider a matter. If the proposal passes, the Board may
consider, in its business judgment, whether to take the
requested action or not, but it is not legally obligated to do
so.
Your Board recommends that you vote AGAINST this proposal.
25
Proposal 6:
Stockholder
Proposal
u
The New York City Fire Department Pension Fund and the New York
City Board of Education Retirement System, collectively, the
beneficial owners of 10,505 shares of our common stock,
have notified us that they intend to present a proposal at the
Annual Meeting. The proposal is set forth below, along with the
recommendation of the Board that you vote AGAINST the proposal.
We accept no responsibility for the accuracy of the proposal.
Stockholder
Proposal
WHEREAS, in 2002, United States Congress, the Securities and
Exchange Commission, and the stock exchanges, recognizing the
urgent need to restore public trust and confidence in the
capital markets, acted to strengthen accounting regulations, to
improve corporate financial disclosure, independent oversight of
auditors, and the independence and effectiveness of corporate
boards; and
WHEREAS, we believe these reforms, albeit significant steps in
the right direction, have not adequately addressed shareholder
rights and the accountability of directors of corporate boards
to the shareholders who elect them; and
WHEREAS, we believe the reforms have not addressed a major
concern of institutional investors the continuing
failure of numerous boards of directors to adopt shareholder
proposals on important corporate governance reforms despite the
proposals being supported by increasingly large majorities of
the totals of shareholder votes case for and against the
proposals;
WHEREAS, the Board of Directors of our company has not adopted
shareholder proposals that were supported by majority votes;
NOW, THEREFORE, BE IT RESOLVED: That the shareholders request
the Board of Directors initiate the appropriate process to amend
the Companys governance documents (certificate of
incorporation or by-laws) to establish an engagement process
with the proponents of shareholder proposals that are supported
by a majority of the votes cast, excluding abstentions and
broker non-votes, at any annual meeting.
In adopting such a policy, the Board of Directors should include
the following steps:
|
|
|
|
|
Within four months after the annual meeting, an independent
board committee should schedule a meeting (which may be held
telephonically) with the proponent of the proposal, to obtain
any additional information to provide to the Board of Directors
for its reconsideration of the proposal. The meeting with the
proponent should be coordinated with the timing of a regularly
scheduled board meeting.
|
|
|
|
Following the meeting with the proponent, the independent board
committee should present the proposal with the committees
recommendation, and information relevant to the proposal, to the
full Board of Directors, for action consistent with the
companys charter and by-laws, which should necessarily
include a consideration of the interest of the shareholders.
|
Recommendation
of the Board AGAINST the Proposal
Your Board is committed to communicating with stockholders and
being responsive to their concerns, and believes that it has
established appropriate processes to consider all stockholder
proposals. Your Board also believes that it has a demonstrated
history of reaching out to stockholders on matters of corporate
governance and in particular to stockholders whose proposals
have received majority support. Accordingly, your Board believes
this proposal to establish a rigid and formal engagement process
is unnecessary and would not be in the best interests of
stockholders.
The Nominating/Governance Committee, which is composed entirely
of independent directors, carefully considers all stockholder
proposals submitted for a vote at an annual stockholders meeting
and makes recommendations to the Board on whether to adopt or
oppose them (in whole or in part) based on the best
26
interests of all stockholders. It also reconsiders stockholder
proposals that receive majority or substantial support at an
annual stockholders meeting. Applicable considerations include,
among others (a) the appropriateness of the proposal,
(b) applicable requirements of KB Homes Certificate
of Incorporation and By-laws, (c) existing and pending
legal requirements, including requirements under applicable
state corporate law, (d) potential fit or conflict with
existing policies, procedures and practices, (e) the impact
of implementing the proposal on KB Homes overall
operations, and (f) whether the proposal is likely to
appropriately accomplish its stated goals and objectives. This
evaluation process may include direct communication with a
proponent, as the Nominating/Governance Committee believes is
appropriate. Your Board believes the mandatory engagement
process set forth in this proposal would not enhance its process
for evaluating stockholder proposals.
In addition, stockholders have several ways to communicate with
the Board, including contacting the Board through the Corporate
Secretary (as described above under the heading Corporate
Governance Highlights), and your Board welcomes any
stockholder input on the proposals that are voted on at an
annual stockholders meeting.
A critical concern about this proposal is that a proponent of a
qualifying proposal may not represent the views of most
stockholders, including those who cast a vote in favor of the
proposal. Stockholders who vote in favor of a proposal may have
very different reasons for doing so, which is not addressed by
the proposed process. Moreover, your Board believes that all
stockholders should have an equal opportunity to advocate and
provide information in support of a stockholder proposal if they
choose to do so. Special treatment for the proponent undercuts
this equal opportunity commitment. This proposal would also
effectively disenfranchise stockholders who exercise their
legitimate right to affirmatively abstain from voting on a
proposal, further demonstrating that this proposal would not
serve the best interests of all stockholders.
Notwithstanding the proponents claims, your Board has
proactively engaged with proponents of proposals that received
majority support at an annual stockholders meeting. In 2008,
your Board adopted a policy to limit senior executive severance
benefits to 2.99 times base salary plus bonus in response to a
proposal that received majority support at that years
annual stockholders meeting. In shaping the executive severance
policy, your Board, KB Home senior management and outside
advisors sought the proponents input. In addition, with
stockholder support, your Board has adopted a number of leading
corporate governance reforms in the last few years, including
eliminating fair price and supermajority voting
provisions from KB Homes by-laws, and electing a
Non-Executive Chairman of the Board.
In 2009, the proponent of this proposal submitted a proposal to
establish a non-binding advisory vote on named executive officer
compensation. Although a majority of votes cast were in favor,
the proposal failed to achieve the affirmative vote of the
majority of shares of our common stock present and represented
at the 2009 annual stockholders meeting, the applicable standard
under our by-laws. Based on this outcome and given the
significant legislative and regulatory momentum underway at the
time of the 2009 meeting and through to the present time to
establish a mandatory advisory vote for all U.S. public
companies, your Board continues to believe that it is in the
best interests of all stockholders to evaluate adopting an
advisory vote mechanism when definitive rules are established.
Given that context, and in light of your Boards current
approach to and history of considering stockholder proposals and
reaching out to stockholders, your Board believes that the
formal engagement process advocated by this proposal would have
a needless adverse impact on Board-stockholder interaction with
respect to corporate governance matters and should not be
implemented.
Vote
Required
Approval of this stockholder proposal requires the affirmative
vote of the majority of shares of common stock present or
represented, and entitled to vote thereon, at the Annual
Meeting. However, the proposal is a request to the Board to
consider a matter. If the proposal passes, the Board may
consider, in its business judgment, whether to take the
requested action or not, but it is not legally obligated to do
so.
Your Board recommends that you vote AGAINST this proposal.
27
Ownership of
KB Home Securities
Ownership
of Directors and Management
The following table shows, as of February 26, 2010, the
beneficial ownership of our common stock by each current
director and each of the current executive officers named below
in the Summary Compensation Table, and by all
current directors and executive officers as a group. Except as
stated in footnote (d) to the table, beneficial ownership
is direct and each director and executive officer has sole
voting and investment power over his or her shares.
|
|
|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
|
|
|
|
of Beneficial
|
|
|
Percent of
|
Non-Employee Directors
|
|
|
Ownership (a - e)
|
|
|
Class
|
Mr. Bollenbach
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
Mr. Burkle
|
|
|
1,000
|
|
|
*
|
|
|
|
|
|
|
|
Mr. Finchem
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
Mr. Jastrow
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
Mr. Johnson
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
Ms. Lora
|
|
|
2,043
|
|
|
*
|
|
|
|
|
|
|
|
Mr. McCaffery
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
Mr. Moonves
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
Mr. Nogales
|
|
|
7,400
|
|
|
*
|
|
|
|
|
|
|
|
Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey T. Mezger
|
|
|
2,539,416
|
|
|
2.81%
|
|
|
|
|
|
|
|
Wendy C. Shiba
|
|
|
20,930
|
|
|
*
|
|
|
|
|
|
|
|
William R. Hollinger
|
|
|
271,035
|
|
|
*
|
|
|
|
|
|
|
|
Wendy L. Marlett
|
|
|
131,951
|
|
|
*
|
|
|
|
|
|
|
|
Kelly K. Masuda
|
|
|
56,624
|
|
|
*
|
|
|
|
|
|
|
|
All current directors and executive officers as a group
(16 people)
|
|
|
3,096,567
|
|
|
3.42%
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Not shown in the table are the non-employee directors
equity-based holdings under the Director Plan, which are shown
above under the heading Director Compensation, and
certain equity-based holdings of our named executive officers,
which are shown below under Grants of Plan-Based Awards
During Fiscal Year 2009 and Outstanding Equity
Awards at Fiscal Year-End 2009. |
|
(b) |
|
Included are shares of common stock that can be acquired within
60 days of February 26, 2010 through the exercise of
stock options granted under our employee equity compensation
plans in the following amounts: Mr. Mezger 2,179,023;
Ms. Shiba 0; Mr. Hollinger 176,058; Ms. Marlett
53,200; and Mr. Masuda 45,000; and all current executive
officers as a group 2,398,931. |
|
(c) |
|
Included are shares of restricted common stock in the following
amounts: Mr. Mezger 0; Ms. Shiba 10,930;
Mr. Hollinger 10,525; Ms. Marlett 7,287; and
Mr. Masuda 5,668; and all current executive officers as a
group 41,697. |
|
(d) |
|
Ms. Lora holds 2,043 shares of our common stock in a
trust in which she and her spouse are trustees and sole
beneficiaries and over which they jointly exercise voting and
investment power. |
|
(e) |
|
Based on records available to us, Mr. Raymond P. Silcock,
our former Executive Vice President and Chief Financial Officer,
beneficially owned 30,000 shares of our common stock as of
February 26, 2010. Mr. Silcocks beneficial
ownership is not included in the total shown in the above table. |
|
* |
|
Indicates less than one percent ownership. |
28
Beneficial
Owners of More Than Five Percent of Our Common Stock
The following table shows each person or entity known to us as
of February 26, 2010 to be the beneficial owner of more
than five percent of our common stock:
|
|
|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
|
|
|
|
of Beneficial
|
|
|
Percent of
|
Name and Address of Beneficial Owner
|
|
|
Ownership
|
|
|
Class
|
FMR LLC and Edward C. Johnson 3d(a)
|
|
|
13,202,131
|
|
|
14.99%(b)
|
|
|
|
|
|
|
|
82 Devonshire Street
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boston, Massachusetts 02109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KB Home Grantor Stock Ownership Trust(c)
|
|
|
11,217,051
|
|
|
12.70%
|
|
|
|
|
|
|
|
Wachovia Executive Benefits Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One West Fourth Street - NC 6251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Winston-Salem, North Carolina 27101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock, Inc., et al.(d)
|
|
|
6,181,658
|
|
|
7.02%(b)
|
|
|
|
|
|
|
|
40 East
52nd
Street
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York, NY 10022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
The stock holding information reported in the table above and in
this footnote is based solely on an amendment to
Schedule 13G dated February 16, 2010 that FMR LLC
filed with the SEC to report beneficial ownership of FMR LLC and
Mr. Edward C. Johnson 3d, FMR LLCs Chairman, as of
December 31, 2009. The shares are beneficially owned by the
following direct or indirect wholly-owned subsidiaries of FMR
LLC: (i) Fidelity Management & Research Company
(13,025,495 shares), and (ii) Pyramis Global Advisors
Trust Company (176,636 shares). FMR LLC and
Mr. Edward C. Johnson 3d each have sole dispositive power
as to all of the shares reported and, through control of Pyramis
Global Advisors Trust Company, sole voting power as to
176,636 shares. |
|
(b) |
|
These percent of class figures are furnished in reliance on the
respective Schedule 13G filings or amended
Schedule 13G filings by FMR LLC and Edward C. Johnson 3d,
and BlackRock, Inc. |
|
(c) |
|
The GSOT holds all of the shares of our common stock shown above
per a trust agreement with Wachovia Bank, N.A., as trustee. The
GSOT shares are held to help us meet certain obligations to
employees under our employee benefit plans. Both the GSOT and
the trustee disclaim beneficial ownership of the shares
reported. The trustee has no discretion over the manner in which
the GSOT shares are voted. Under the GSOT trust agreement,
employees who hold unexercised options under our employee equity
compensation plans will determine how the GSOT shares are voted. |
|
|
|
The trustee will vote the GSOT shares as directed by those
eligible employees who submit voting instructions for the
shares. The number of GSOT shares as to which any one employee
can direct the vote depends on how many employees submit voting
instructions to the trustee. Employees who are also directors
cannot vote GSOT shares; therefore, Mr. Mezger cannot
direct the vote of any GSOT shares. If all eligible employees
submit voting instructions to the trustee, the other named
executive officers who are employed by us at the date of the
Annual Meeting can direct the vote of the following amounts of
GSOT shares: Ms. Shiba 369,316, Mr. Hollinger
1,274,431, Ms. Marlett 523,847, and Mr. Masuda
426,341, and all current executive officers as a group
(excluding Mr. Mezger) 3,591,639. Under the GSOT trust
agreement, votes on GSOT shares received by the trustee will be
held in confidence and will not be disclosed to any person,
including to us. |
|
(d) |
|
The stock holding information reported in the table above and in
this footnote is based solely on a Schedule 13G dated
January 29, 2010 that BlackRock, Inc., a parent holding
company, filed with the SEC to report beneficial ownership as of
December 31, 2009. Of the amount reported as beneficially
owned, BlackRock, Inc. subsidiaries specified in the
Schedule 13G, collectively, had sole voting power as to
6,181,658 shares of our common stock and had sole
dispositive power as to 6,181,658 shares. |
29
Stock
Ownership Requirements
We have established stock ownership requirements for our
non-employee directors and senior management to better align
their interests with those of our stockholders. Our Corporate
Governance Principles require each of our non-employee directors
to own at least $250,000 in value of our common stock or common
stock equivalents within five years of joining the Board. For
these purposes, a common stock equivalent means any instrument
granted to a non-employee director as compensation for the
directors service on the Board reflecting the right to
receive a share of our common stock (other than by means of a
right to purchase) or a cash payment equal to the value of a
share of our common stock.
Our Executive Stock Ownership Policy applies to members of our
senior management team and requires executives at various levels
to own from 6,000 to 150,000 shares, depending on position.
Executives are expected to demonstrate meaningful progress
toward satisfying their ownership requirement and to comply
fully within five years of becoming subject to the policy, or be
subject to consequences for non-compliance. The policy, as
applied to our named executive officers, is discussed in
additional detail below under the heading Equity Stock
Ownership Policy.
30
Executive
Compensation
Management
Development and Compensation Committee Report
The Management Development and Compensation Committee of the
Board of Directors has reviewed and discussed the following
Compensation Discussion and Analysis with KB Home
management. Based on this review and discussion, the Management
Development and Compensation Committee recommended to the Board
of Directors that the Compensation Discussion and
Analysis be included in this Proxy Statement.
Management Development and Compensation Committee
Michael G. McCaffery, Chair
Stephen F. Bollenbach
Timothy W. Finchem
Luis G. Nogales
Compensation
Discussion and Analysis
Overview
of Executive Compensation and Benefit Programs and
Decision-Making Process
The primary objectives of our executive compensation and benefit
programs are to attract, motivate and retain a talented
management team to execute our KBnxt operational business model.
We believe the core
Built-to-Ordertm
principles of our KBnxt operational business model and our
related strategic initiatives provide us with a distinct
competitive advantage over other homebuilders. Within this
framework, we design named executive officer (NEO)
and other senior executive compensation and benefits to reward
individual contributions to the achievement of our KBnxt
strategic goals and sustainable enterprise value. We believe
this approach establishes a clear alignment of executive and
stockholder interests. In addition, the Compensation Committee
will adjust NEO and other senior executive compensation and
benefits to the extent it believes is appropriate to take into
account recent and expected overall company performance, and
broader industry and economic conditions.
|
|
|
Executive Compensation Decisions
Participants, Factors, Component Mix, and Data Sources
|
|
|
|
Participants
and
Roles
|
|
Compensation Committee:
With support from our management and
outside advisors, oversees our executive compensation and
benefit programs, including our arrangements with our CEO, other
NEOs and other senior executives.
|
|
|
Annually reviews and approves the
compensation of our CEO, other NEOs and other senior executives
based on an evaluation of their performance against pre-approved
goals and other factors.
|
|
|
Independent Compensation Committee Consultant
Semler Brossy:
|
|
|
Provides advice and perspective to the
Compensation Committee on executive and non-employee director
compensation and benefits.
|
|
|
To maintain its independence and avoid
any conflict of interests, may not work directly for our
management unless the Compensation Committee pre-approves the
work, including fees.
|
|
|
CEO and Senior Human Resources and Legal
Management:
|
|
|
At the Compensation Committees
request, provides recommendations, input and support on
compensation and benefit program design and implementation, and
compliance and disclosure requirements. At least annually, our
CEO reviews and discusses with the Compensation Committee the
overall performance of our senior executive management,
excluding himself, and makes recommendations as to their
compensation and benefits.
|
|
|
Has retained a compensation consultant,
Towers Perrin, for the purpose of providing compensation and
benefits related information, analysis and support.
|
|
|
|
31
|
|
|
Executive Compensation Decisions
Participants, Factors, Component Mix, and Data Sources
(continued)
|
|
|
|
Key
Factors
|
|
These factors are considered subjectively and no one factor is
specifically given more weight than another.
|
|
|
Each executives specific roles, responsibilities, performance, experience, and skill set.
|
|
|
The market for comparable jobs.
|
|
|
The existing and expected business environment.
|
|
|
Our overall financial and operational results.
|
|
|
|
Component
Mix
|
|
The Compensation Committee uses its own judgment in approving
compensation and benefit components and levels for each of our
NEOs and other senior executives, and does not follow any set
formula or set a specific allocation as to any one component.
Through this subjective approach, the Compensation Committee
generally takes into account (a) the key factors described
above; (b) the data sources described below; and (c) the
totality of compensation that may be paid through base salary
and annual and long-term incentives.
The Compensation Committees intent is to calibrate
compensation and benefit components so that the overall
compensation they may provide to an executive is in line with
what the Compensation Committee believes is appropriate. As a
result, and because the Compensation Committee has generally
weighted NEO and senior executive compensation significantly
toward variable, performance-based annual and long-term
incentives to align it with stockholder interests, each such
executives compensation can vary from year-to-year and
from other executives compensation in any year. To reflect
the CEOs key role in setting and executing long-term
business strategies, the Compensation Committee has awarded the
CEO a greater proportion of long-term incentives and greater
overall compensation compared to our other senior executives.
|
|
|
|
Data
Sources
|
|
Semler Brossy, our CEO and our senior human resources management
provide the Compensation Committee with data to consider when
making compensation decisions. Each data source assists the
Compensation Committee in making compensation decisions, and no
one source is specifically given more weight than another. The
Compensation Committee, however, considers individual
performance evaluations as a more important input than tally
sheet and survey data.
|
|
|
Tally Sheets. Our management typically provides the Compensation Committee with a tally sheet for each member of our senior executive management at the beginning of each fiscal year, and may do so at other times in connection with senior executive management compensation decisions. Depending on when they are provided, the tally sheets may contain up to five years of data on various compensation and benefit components, including base salary and annual and long-term incentives.
|
|
|
General Market and Peer Group Data. Our peer group which is listed below consists of other high production home building companies. The Compensation Committee uses peer group and general industry market survey data to get a general sense of whether our executive compensation is reasonable and competitive with the compensation paid to executives with similar responsibilities at companies both within and outside the homebuilding industry that we consider to be similar to us based on revenues and nature of operations. The Compensation Committee does not, however, benchmark or target executive compensation and benefits at any specific level within a general industry or our peer group.
|
|
|
CEO Employment Agreement. The terms of our CEOs compensation are governed by his Employment Agreement. Under the Employment Agreements, our CEO is to be paid an annual salary of no less than $1 million. He is also eligible to receive an annual incentive and entitled to participate in our long-term incentive compensation arrangements on terms and conditions that are no less favorable than those that apply to our other senior executives. The Board believes the Employment Agreement provides compensation that is in line with CEO compensation practices in the homebuilding industry. Our CEO is the only NEO with whom we have an employment agreement.
|
|
|
|
32
|
|
|
|
|
|
|
|
Peer Group
|
Like us, our peers are engaged in high production home building.
Our annual revenues approximate the group median.
|
|
|
Beazer Homes
D.R. Horton
Hovnanian Enterprises
Lennar Corporation
|
|
MDC Holdings
NVR Incorporated
Pulte Homes
Ryland Group
|
|
Standard Pacific
Toll Brothers
|
|
|
|
|
|
|
|
|
Compensation
in Context: Fiscal Year 2009
In our 2009 fiscal year, general economic conditions remained
weak and we continued to face challenging and volatile business
conditions. Amid significant uncertainty regarding the timing
and extent of any meaningful rebound in many housing markets and
the overall economy, our primary strategic goals for the year
were generating cash and maintaining a strong balance sheet;
restoring the profitability of our homebuilding operations; and
positioning our business to capitalize on a housing market
recovery when it occurs. We believe we made substantial progress
in 2009 towards achieving each of these goals.
We sustained the financial strength and flexibility we had
entering 2009, ending the year with $1.29 billion of cash,
cash equivalents and restricted cash and a lower overall debt
level compared to year-end 2008. With regard to profitability,
we significantly narrowed our net loss to $101.8 million in
2009 from $976.1 million in 2008, despite the difficult
market conditions. With regard to positioning our business for
future growth, we continued our nationwide roll-out of
affordable, value-engineered new product designs, particularly
our The Open Series line, which helped us generate a
year-over-year increase in net orders compared to our 2008
results. We also strategically re-entered the
Washington, D.C. metropolitan market and continued to
adjust our operational infrastructure to focus resources on the
markets we see as having strong long-term growth prospects. Our
Annual Report provides further details on our 2009 fiscal year
performance. Given the tough and uncertain business conditions,
we structured our 2009 executive compensation and benefit
programs to retain and motivate, in a cost-effective manner, our
senior executive management team to promote optimal execution on
our primary strategic goals. Below is additional information and
analysis regarding our 2009 programs and the specific
arrangements we have with our NEOs.
NEO
Compensation for the 2009 Fiscal Year
|
|
|
|
NEO Compensation and
|
|
|
|
Benefit Components
|
|
|
Description/Purpose
|
Base Salary
|
|
|
Semi-monthly cash payments that provide competitive fixed income
for performance of day-to-day position responsibilities.
|
|
|
|
|
Annual Incentives
|
|
|
Lump sum cash payments made after a relevant fiscal year to
build accountability and reward achievement of annual business
goals.
|
|
|
|
|
Long-Term Incentives
|
|
|
Stock- or cash-settled common stock options/SARs/restricted
stock/phantom shares that are designed to promote retention and
align executive compensation and stockholder value creation over
a multi-year time period.
|
|
|
|
|
Executive Health Benefits
|
|
|
Provide 100% reimbursement of qualified out-of-pocket medical,
dental and vision expenses.
|
|
|
|
|
Executive Death Benefits
|
|
|
Provide a death benefit to an executives beneficiary
through a Death Benefit Only Plan through company-owned life
insurance policies. That plan was closed to new participants in
2004 and now the benefit is provided through company-paid term
life insurance.
|
|
|
|
|
Deferred Compensation Plan
|
|
|
Permits deferred receipt of earned compensation into a
non-qualified savings plan similar to our 401(k) Savings Plan;
we match dollar-for-dollar deferrals under this plan and our
401(k) Savings Plan up to a total of six percent of base salary.
|
|
|
|
|
Retirement Plan (closed)
|
|
|
Provides an annuity benefit after retirement; not all NEOs
participate in the plan and no participants have been added to
the plan since 2004.
|
|
|
|
|
33
Mix and
Levels of NEO Compensation Components
Base Salaries. Base salary is a fixed element
of compensation for our CEO and our other NEOs. The Compensation
Committee annually reviews and may approve NEO base salary
adjustments based on a number of factors, including each
NEOs experience and specific responsibilities; individual
performance and expectations; our current and expected financial
and operational results; equity of salary relative to our
executives who are at the same internal management level; market
rates to ensure competitiveness; our general budgetary
guidelines for base salary increases as set by the Compensation
Committee; and our overall financial and operational results.
Based on its subjective weighing of these considerations, the
Compensation Committee maintained our salary levels at the 2008
rates for all NEOs as well as other senior management. The CEO
recommended, and the Compensation Committee agreed, that salary
increases for 2009 would be made only to retain non-executive
employees and consist only of market-level merit increases or
adjustments to address below-market salaries.
Annual Incentives. For 2009, each of our
NEOs, except Mr. Silcock, was eligible for an annual
incentive if at least one of two objective performance goals was
achieved. The Compensation Committee, however, had the
discretion to reduce or eliminate the actual payout of annual
incentives based on our overall performance, an NEOs
individual performance, or other factors, including the factors
described above under the heading Executive Compensation
Decisions Participants, Factors, Component Mix, and
Data Sources. In approving the terms of the annual
incentives for our NEOs, which was done at the beginning of
2009, the Compensation Committee sought to balance the need to
retain and appropriately motivate our NEOs with the objective of
containing overall compensation expense given the business
environment. These annual incentives are described below.
Mr. Silcock, who joined us in September, was eligible for a
guaranteed bonus, as described below under the heading
Guaranteed Bonus.
Each NEO was eligible to receive an annual incentive only if
(a) our pretax loss did not exceed $350 million for
2009, excluding inventory impairments and other non-recurring
items, or (b) our operating cash flow for 2009 was equal to
or above negative $100 million, with the achievement of
each of these independent performance goals determined in
accordance with U.S. generally accepted accounting
principles. If neither goal was achieved, our NEOs were not
eligible to receive any annual incentive payout. If either
performance goal was achieved, each NEO, except for
Ms. Marlett, was eligible to receive their respective
maximum annual incentive payout, subject to the Compensation
Committee exercising downward discretion (as described above
under the heading Annual Incentives) in determining
the actual payout relative to each NEOs respective
threshold, target and maximum payout levels, which are described
below. For Ms. Marlett, if either performance goal was
achieved, she was eligible to receive an annual incentive payout
in relation to her threshold, target and maximum payout levels
described below based primarily on our actual pretax earnings
and cash flow results and in part on her personal performance,
subject to the Compensation Committee exercising downward
discretion in determining the actual payout.
Ms. Marletts annual incentive was structured
differently from the other NEOs because she was not a
designated executive officer at the time the Compensation
Committee approved annual incentives for 2009. The structure of
Ms. Marletts annual incentive was consistent with
those the Compensation Committee approved for executives at her
internal management level.
The Compensation Committee approved the performance goals to
match the NEOs annual incentives to our 2009 strategic
goals of generating cash and maintaining a strong balance sheet
and restoring the profitability of our homebuilding operations.
The specific parameters of each performance goal were based on
our outlook at the time the annual incentives were approved,
which reflected our expectations of an extremely difficult and
volatile housing market and recessionary economic conditions
throughout 2009. In addition, our corresponding strategic
initiatives contemplated lower overall homes delivered and
revenues compared to prior years as a result of repositioning
and streamlining our operations and our nationwide roll-out of
new product designs. Based on this outlook, the Compensation
Committee determined that each of the performance goals was
substantially uncertain to be met and would, to the extent
achieved, represent a strong performance result for the year.
For the 2009 annual incentives, the Compensation Committee
approved potential threshold, target and maximum payout levels
for our CEO and for each of our NEOs equal in each case to a
specified percentage of their annual base salary. For our CEO,
the payout levels were 50%, 200% and 400%, respectively. For
34
Ms. Shiba, the payout levels were 23%, 90% and 180%,
respectively. For Messrs. Hollinger and Masuda, the payout
levels were 20%, 80% and 160%, respectively. For
Ms. Marlett, the payout levels were 20%, 80% and 148%,
respectively. The annual incentive payout levels for our NEOs
corresponded to each executives respective internal
management level. The Compensation Committee believes the
relatively higher potential payouts that it approved for our
CEOs annual incentive compared to the annual incentives it
approved for our other NEOs appropriately reflect
Mr. Mezgers unique and critical role in setting and
directly overseeing the implementation of our overall operating
strategy and significant related strategic initiatives, his
broader responsibilities for driving our overall financial and
operational performance, and his wide-ranging internal and
external duties across all areas of our business.
The Compensation Committee determined that both objective
performance metrics for the 2009 NEO annual incentives were
achieved, with a 2009 pretax loss, excluding inventory
impairments and other non-recurring items, of $67.2 million
and 2009 operating cash flow of $349.9 million. Based on
these results, each NEO was eligible for an annual incentive
payout at the NEOs respective maximum payout level as
follows: Mr. Mezger $4.0 million; Ms. Shiba
$822,600; Mr. Hollinger $584,000; Ms. Marlett
$481,000; and Mr. Masuda $496,000. The maximum payout
amount for Ms. Marlett also includes her achieving the
personal performance component of her annual incentive, as
further discussed in the paragraph below.
In approving the NEOs actual annual incentive payouts, the
Compensation Committee on a subjective basis took into account
the strong performance we achieved relative to the goals set at
the beginning of the year and also determined that each NEO
delivered strong individual performance in a challenging
business environment. With respect to Mr. Mezger, the
Compensation Committee, with the Boards approval,
considered the significant and effective leadership he provided
in directing the progress made towards achieving our key
strategic goals for 2009, which encompassed, among other things,
implementing a successful nationwide roll-out of new product
designed to meet current homebuyer needs and interests;
measurably improving profit margins and maintaining balance
sheet strength and flexibility by managing and reducing costs,
land inventory and debt levels; and positioning the
organization, geographically and operationally, to achieve
future growth as housing market conditions improve.
For our NEOs other than our CEO, the Compensation Committee,
based in large part on the CEOs evaluation of them, found
that Ms. Shiba provided excellent oversight of our
governance, ethics and compliance programs and significant
support to the achievement of key financial and operational
initiatives, and successfully resolved a number of material
litigation matters; Mr. Hollinger provided critical
leadership and oversight of our accounting and financial
reporting process in serving as our principal financial officer
for most of the year, in addition to his duties as our Chief
Accounting Officer; Mr. Masuda played a key role in
restructuring our debt to reduce the overall amount and extend
its maturity, and in helping us to maintain a strong and liquid
balance sheet; and Ms. Marlett successfully led our sales
and marketing organization to achieve year-over-year net order
growth and drove the consumer launch of our new product and new
communities, which were instrumental in our 2009 results.
Ms. Marlett was determined to have achieved the maximum
potential payout under the personal performance component of her
annual incentive, and this is reflected in the amount noted
above for Ms. Marlett. The Compensation Committee did not
apply any specific weighting or formula with respect to the
foregoing considerations in determining our NEOs final
annual incentive payouts.
Despite the strong operational and individual performance in
2009, given our overall financial results for the year and
business conditions, the Compensation Committee used its
discretion to reduce the annual incentive payouts to our NEOs to
the following amounts: Mr. Mezger $2,750,000;
Ms. Shiba $411,300; Mr. Hollinger $390,000;
Ms. Marlett $300,000; and Mr. Masuda $250,000.
Guaranteed Bonus. Mr. Silcock received a
guaranteed bonus of $200,000 for the 2009 fiscal year that was
agreed to when he was hired in September.
Long-Term Incentives. We provide long-term
incentives to our NEOs that consist primarily of grants of
equity-based vehicles settled in cash or stock. Because these
awards vest over a three-year time horizon and the value of
these incentives is tied to the share price of our common stock,
we believe they are performance-based and establish an alignment
of NEO and stockholder interests over a long-term horizon. Other
objectives the Compensation Committee considered in deciding on
the grant vehicles and parameters for our 2010 fiscal year
long-term incentives included that the plan be sustainable over
time and varied market conditions; reward
35
recipients for strong performance in delivering financial and
operational results that drive stockholder value creation while
reflecting expected position-based contributions and
responsibilities; and balance and align stockholder and
management interests. These other objectives are reflected in
the types and mix of long-term incentives granted and the
vesting conditions applied to the grants, as described below. We
typically grant long-term incentives in October each year, in
conjunction with a regularly scheduled Compensation Committee
meeting, for the following fiscal year. Accordingly, the 2010
fiscal year long-term incentives were granted in October 2009.
In 2007 and 2008, the Compensation Committee granted to our NEOs
cash-settled SARs and phantom shares as long-term incentives
because at the time the grants were made there were a limited
number of shares of common stock that were available for grant
under our existing stockholder-approved equity compensation
plans. Except for their cash-settled payout, the SARs and
phantom shares granted in 2007 and 2008 mirror the attributes of
common stock options and shares of restricted common stock,
respectively. With the return in 2009 of a significant number of
shares to our existing stockholder-approved equity compensation
plans, as discussed in our Annual Report, the Compensation
Committee granted 2010 fiscal year long-term incentives to our
NEOs and other senior executives and employees in the form of
common stock options and shares of restricted common stock.
As with the annual base salaries and annual incentives it
approved for 2009, the Compensation Committee determined that
the 2010 fiscal year long-term incentives should be oriented to
emphasize, in a cost-effective manner, the retention and
motivation of our top executive talent, those who are critical
in driving long-term, sustainable value for our stockholders. In
reaching this determination, the Compensation Committee
considered that the retention value of our past long-term
incentive awards is very low given the sustained downturn in the
homebuilding industry and the general economy. This downturn has
caused the price of our common stock to fall significantly below
the exercise price of most of our outstanding employee stock
options. The Compensation Committee also considered that our
executives did not exercise options when they could, but instead
held options through the downturn. The Compensation Committee
believes it is appropriate for executives to have a stake in our
long-term success that aligns with rebuilding our market value.
To address these circumstances and promote retention while
containing compensation expense, the Compensation Committee
approved 2010 fiscal year long-term incentives at grant date
values that roughly approximated the grant date values for the
2009 fiscal year long-term incentives, although the NEO grants
were all slightly less than those made a year ago.
Based on these considerations and objectives, the Compensation
Committee, with input from Semler Brossy and our CEO (as to our
other NEOs and other senior management), granted to our NEOs a
combination of common stock options and shares of restricted
common stock. The specific amounts granted to our CEO and to the
other NEOs are shown below under the heading Grants of
Plan-Based Awards During Fiscal Year 2009.
For each NEO, the number of 2010 fiscal year long-term
incentives granted was based on the fair value of the award on
the grant date, October 1, 2009, and on a total value the
Compensation Committee approved for the NEO, of which, except
for our CEO (as discussed below), 75% was allocated to common
stock options and 25% was allocated to shares of restricted
common stock. The Compensation Committee approved the 75%/25%
allocation between common stock options and shares of restricted
common stock to establish a strong link between the NEOs
and stockholders interests in long-term value creation as
the value of each common stock option increases with increases
in the share price of our common stock. At lower management
levels, to promote retention the allocation between common stock
options and shares of restricted common stock was weighted more
towards shares of restricted common stock (from 50% to 100% of
the overall grants to individual recipients) and restricted cash
grants at the lowest levels of management participants.
Mr. Mezgers long-term incentive value was set at
$3,500,000 based on the Compensation Committees view that
it would appropriately compensate and motivate Mr. Mezger
to continue to provide effective leadership and strong
performance in developing and executing our long-term business
strategy during the current housing market downturn, as the
Compensation Committee felt he had in 2009 (see discussion above
under the heading Annual Incentives with respect to
the determination of Mr. Mezgers 2009 annual
incentive payout). Mr. Mezgers long-term incentive
consisted solely of stock options based on the Compensation
Committees determination that they provide, compared to
other equity-based instruments, the best alignment
36
of his interests with those of our stockholders to meet
the present challenges for the homebuilding industry and to
enhance our performance relative to other homebuilders over the
longer term.
For our other NEOs, the Compensation Committee considered a
total long-term incentive value set within a range of 100% to
200% of current base salary based on their internal management
level. Within this range, the Compensation Committee
subjectively approved a dollar value for each NEO based on a
number of factors, including the above-described objectives for
the 2010 long-term incentives, the NEOs individual current
and expected future performance and role, overall potential
compensation cost, and the factors described above under the
heading Executive Compensation Decisions
Participants, Factors, Component Mix, and Data Sources.
Based on these considerations, the Compensation Committee
approved for each NEO other than our CEO the following total
long-term incentive values: Ms. Shiba $675,000;
Mr. Hollinger $650,000; Ms. Marlett $450,000;
Mr. Masuda $350,000; and Mr. Silcock $1,200,000 (which
he forfeited upon his termination of employment with us).
As with the 2009 fiscal year long-term incentives, all 2010
fiscal year long-term incentives were granted without
performance-vesting requirements. This is largely because the
Compensation Committee believed it could not set meaningful and
sustainable long-term performance targets due to a continued
uncertain outlook for the housing market and the overall
economy. Given the importance of motivating and retaining top
executive talent in a difficult business environment, and the
Compensation Committees view that common stock options are
inherently performance-based and performance-motivating
incentives that appropriately align the interests of executives
and stockholders, the Compensation Committee determined that
performance-vesting requirements would not be productive in
driving financial and operational results over the performance
period for the 2010 fiscal year long-term incentives.
CEO Performance Shares. On July 12,
2007, the Compensation Committee granted to Mr. Mezger
under his Employment Agreement a long-term incentive award of
54,000 performance shares. The performance shares were to vest,
if at all, based on our total stockholder return
(TSR) over a three-year measurement period ending
November 30, 2009, relative to our peer group, as shown in
the chart below. Payouts are linearly interpolated between the
percentiles indicated below.
|
|
|
|
|
|
|
Payout as a Percentage of
|
Relative TSR Percentile
Ranking
|
|
Performance Shares
Granted
|
|
|
Below the 25th percentile
|
|
|
0
|
%
|
25th percentile
|
|
|
25
|
%
|
50th percentile
|
|
|
100
|
%
|
75th percentile and above
|
|
|
150
|
%
|
On January 21, 2010, the Compensation Committee determined
that our TSR for purposes of the performance shares fell into
approximately the 46th percentile. Accordingly, the
Compensation Committee approved Mr. Mezgers vesting
in 48,492 shares of the total 54,000 performance shares
originally granted. The amount of any cash dividends that were
paid on our common stock during the three-year performance
period, were equally and contemporaneously paid to
Mr. Mezger on the 54,000 performance shares.
To further strengthen the alignment of our CEOs interests
with those of our stockholders, the Compensation Committee has
adopted a policy to make the vesting of a majority of any future
grants of equity compensation to our CEO contingent on the
achievement of one or more long-term objective performance
metrics. The metrics may include earnings growth and cash flow
or any of the other performance criteria provided in the
proposed KB Home 2010 Equity Incentive Plan, which are described
above under the heading Proposal 3: Approve the KB
Home 2010 Equity Incentive Plan Performance-Based
Compensation.
Benefits. The majority of our health and
welfare benefits are made available to all full-time employees,
including our NEOs. During 2009, as in years past, our NEOs also
received a supplemental benefit that reimburses them for any
qualified out-of-pocket medical, dental and vision expenses
which exceed amounts payable under the medical, dental and
vision plans. In addition, our NEOs were provided with certain
death benefits and participated in our Deferred Compensation
Plan and Retirement Plan, each as described below under the
heading Post-Termination Arrangements. These
benefits are offered to attract key executive talent and to
promote retention. Mr. Mezger participates in a program
under which he is credited with a specific number of vacation
hours that remains fixed throughout his employment with us,
regardless of actual vacation
37
time taken. When his employment with us ends, he is entitled to
receive a payout of these vacation hours that is based on his
then-current annual base salary.
Perquisites. In 2007, we discontinued
substantially all perquisites to our NEOs, including automobile
allowances, company-paid automobile fuel cards, and
reimbursement of expenses for automobile insurance, annual
financial planning and tax preparation services, and one-time
estate planning services. On a few occasions in 2009, family
members accompanied NEOs on business trips on a
company-chartered aircraft; however, we did not incur any
additional incremental cost for this travel. In one instance in
2009, a portion of a company-chartered aircraft business trip
for our CEO was deemed to be for a personal purpose, and we
incurred an incremental cost of $11,568 for this travel. From
time to time, we also made available to our employees, including
our NEOs, for their personal use, tickets to certain sporting
events purchased as a season subscription for business purposes.
We did not incur any additional incremental costs with such use
and we have discontinued the practice. In connection with
Ms. Shibas hiring and relocation from Cleveland to
Los Angeles, we agreed to pay for certain relocation expenses
and to provide her with a monthly housing cost differential
amount through December 2008. In 2009, Ms. Shiba received
$86,763 under this arrangement. This amount includes
reimbursements related to the sale of her home in Cleveland. In
connection with Mr. Silcocks hiring and relocation
from Connecticut to Los Angeles in September 2009, we agreed to
reimburse his relocation expenses in accordance with our
internal policies and to provide him an allowance of $5,000 per
month for temporary housing for up to six months. In 2009,
Mr. Silcock received $4,570 under this arrangement.
Post-Termination
Arrangements
Severance
Arrangements. Mr. Mezgers Employment
Agreement provides him with certain severance benefits,
discussed below under the heading Potential Payments upon
Termination of Employment or Change in Control.
Following a review of executive severance policies at peer
homebuilding companies and other similarly sized public
companies, the Compensation Committee adopted an Executive
Severance Plan in 2007 for non-change in control situations. All
of our current NEOs participate in the plan. The plan provides a
specified severance benefit ranging from one to two times salary
and bonus depending on a participants internal management
level, as discussed further below under the heading
Potential Payments upon Termination of Employment or
Change in Control.
In July 2008, following stockholder approval of an advisory
proposal, we adopted a policy under which we will obtain
stockholder approval before paying severance benefits to an
executive officer under a future severance arrangement in excess
of 2.99 times the executive officers then-current base
salary and target bonus. Future severance arrangements do not
include severance arrangements existing at the time we adopted
the policy or any severance arrangement we assume or acquire
unless, in each case, the severance arrangement is changed in a
manner that materially increases its severance benefits. We
adopted this policy to underscore our intent to continue to
remain below the 2.99 times limit in our future severance
arrangements.
Other Payments Due Upon Termination of Employment
and/or a
Change in Control. In addition to the severance
arrangements mentioned above, we maintain a Change in Control
Severance Plan (CIC Plan) that provides participants
with certain severance benefits upon a change in control and
accelerated vesting of equity awards and benefits under our
Death Benefit Only Plan (if a participant also participates in
that plan). All of our current NEOs participate in the CIC Plan.
The objectives of the CIC Plan are to enable and encourage our
management to focus its attention on obtaining the best possible
deal for our stockholders in a change in control scenario and to
make objective evaluations of all possible transactions, without
being distracted by the possible impact such transactions may
have on job security and benefits; to promote management
continuity; and to provide income protection in the event of
involuntary loss of employment. In addition, in the event we
experience a change in control, there is accelerated vesting of
any unvested benefits under our Deferred Compensation Plan and
our Retirement Plan, each of which is discussed below under the
heading Retirement Programs, and certain of our
employee benefit plans, including our equity compensation plans.
The payments to which our NEOs may be entitled on termination of
their employment
and/or if we
experience a change in control is further discussed below under
the heading Potential Payments upon Termination of
Employment or Change in Control.
38
Death Benefits. Our Death Benefit Only Plan,
in which Messrs. Mezger and Hollinger and Ms. Marlett
participate, provides a death benefit to the participants
designated beneficiary of $1 million (plus an additional
gross-up
amount sufficient to pay taxes on the benefit and the additional
amount). We closed the Death Benefit Only Plan to new
participants beginning in 2004, and only term life insurance,
with a $750,000 benefit level payable to an executives
designated beneficiaries, has been made available to incoming
eligible executives. We maintain this term life insurance
benefit for Ms. Shiba and Mr. Masuda, and provided it
to Mr. Silcock during 2009. We also maintain a life
insurance death benefit for Mr. Mezger of $400,000.
Retirement Programs. Our 401(k) Savings Plan,
a qualified defined contribution plan, is the only program we
offer to all full-time employees that provides post-employment
benefits. Our current NEOs and certain other senior executives
also participate in an unfunded nonqualified Deferred
Compensation Plan, which allows pretax contributions of base
salary and annual incentive compensation. We provide a
dollar-for-dollar match of Deferred Compensation Plan and 401(k)
Savings Plan contributions of up to an aggregate amount of six
percent of a participants base salary. NEO deferrals under
the Deferred Compensation Plan are shown below under the heading
Non-Qualified Deferred Compensation During Fiscal Year
2009. We offer the Deferred Compensation Plan to give
participating executives the ability to defer amounts above the
contribution limits applicable to our 401(k) Savings Plan.
We maintain a Retirement Plan for certain executives that has
been closed to new participants since 2004. Messrs. Mezger
and Hollinger and Ms. Marlett participate in the Retirement
Plan. The Retirement Plan provides each vested participant with
a specific annual dollar amount for 20 years commencing
following the later of the participants reaching
age 55; the tenth anniversary of the date the participant
commenced his or her participation; or the termination of the
participants employment with us. Mr. Mezgers
original annual benefit amount under the Retirement Plan was
$450,000. For the other NEO participants, the original annual
benefit amount under the Retirement Plan was $100,000. For each
participant, the annual benefit amount is increased by the same
annual cost-of-living adjustments that are applied to federal
social security benefits, starting with the plan year ending
November 30, 2006. Vesting generally requires five years of
participation and, once vested, the participant is entitled to
his or her full benefit. Details of NEO participation in the
Retirement Plan are provided below under the heading
Pension Benefits During Fiscal Year 2009.
Section 162(m) of the Code generally disallows a tax
deduction for compensation over $1 million paid to our
highest paid executives unless it is qualifying
performance-based compensation. We generally design compensation
plans in order to maintain federal tax deductibility for
executive compensation under Section 162(m) of the Code,
and the Compensation Committee considers the potential
Section 162(m) impact when approving the compensation paid
to our NEOs. The Compensation Committee recognizes the need to
balance tax deductibility benefits with the need to provide
effective compensation packages that enhance enterprise and
stockholder value creation, however, and will approve
compensation that may not be deductible under
Section 162(m) of the Code where it believes it is in our
and our stockholders best interests to do so.
Other
Compensation Policies
Equity Stock Ownership Policy. We have had an
executive stock ownership policy since 1998. It is designed to
encourage, and has encouraged, our executives to increase their
ownership of our common stock over time and to align their
interests with our stockholders interests. In February
2008, the Compensation Committee amended the policy, as
described below.
The policy identifies specific levels of stock ownership that
designated executives are expected to achieve. The targeted
stock ownership levels for our NEOs range from 20,000 to
150,000 shares, depending on position. Executives subject
to the policy have five years to achieve these ownership levels
and must make meaningful progress every year towards the
achievement of these ownership levels. Survey data and multiples
of average base salaries per level were used to determine the
ownership expected for each position. Share ownership may
include shares owned outright by a designated executive, shares
owned indirectly through our 401(k) Savings Plan and 60% of
unvested restricted stock grants or phantom share rights.
Phantom share rights are included so that executives subject to
the policy would not be penalized for the limited number of
shares that were available for grant under our existing
stockholder-approved equity compensation plans at the time the
policy was amended. It is assumed that executives will use the
cash proceeds they receive from the vesting
39
of phantom shares to increase their ownership of our common
stock. Once required ownership levels are achieved, they must be
maintained throughout the executives employment. Our
policy provides both financial incentives to achieve ownership
requirements as well as material consequences for
non-compliance. The Compensation Committee may, from time to
time, reevaluate and revise the ownership requirements to
account for material changes in stock price. Our NEOs are
currently in compliance with the policy.
Equity-Based Award Grant Policy. In February 2007,
the Compensation Committee adopted a policy that is designed to
enhance the process by which we grant equity-based awards,
including stock options, SARs, phantom shares and restricted
stock, by governing the timing of equity-based awards and
establishing certain internal controls over the grant of such
awards, as described below.
The policy requires that the Compensation Committee (or the
Board) approve all grants of equity-based awards, and their
terms. The policy does not permit any delegation of granting
authority to our management. The grant date of any equity-based
award will be the date on which the Compensation Committee met
to approve the grant unless a written resolution sets a later
date. The exercise price of any stock option award will not be
less than the closing price of our common stock on the NYSE on
the grant date. All equity-based award grants made in 2009 were
made in compliance with the policy and were approved at
regularly-scheduled Compensation Committee meetings in January
and October 2009, as discussed above under the heading
Long-Term Incentives.
Recovery of Compensation. Under his
Employment Agreement, our CEO is required to repay certain bonus
and incentive- or equity-based compensation he receives if we
are required to restate our financial statements as a result of
his misconduct, consistent with Section 304 of the
Sarbanes-Oxley Act of 2002.
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
Fiscal
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
Name and Principal
Position
|
|
|
Year
|
|
|
($)
|
|
|
($)(a)
|
|
|
($)(b)
|
|
|
($)(b)
|
|
|
($)(c)
|
|
|
($)(d)
|
|
|
($)(e)
|
|
|
($)
|
Jeffrey T. Mezger
President and Chief Executive
Officer
|
|
|
2009
|
|
|
$
|
1,000,000
|
|
|
|
$
|
0
|
|
|
|
$
|
1,137,076
|
|
|
|
$
|
3,310,337
|
|
|
|
$
|
2,750,000
|
|
|
|
$
|
747,377
|
|
|
|
|
$83,699
|
|
|
|
|
$9,028,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
1,000,000
|
|
|
|
|
0
|
|
|
|
|
1,069,341
|
|
|
|
|
4,593,443
|
|
|
|
|
2,750,000
|
|
|
|
|
141,666
|
|
|
|
|
70,482
|
|
|
|
|
9,624,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
1,000,000
|
|
|
|
|
6,000,000
|
|
|
|
|
4,181,624
|
|
|
|
|
3,743,258
|
|
|
|
|
97,500
|
|
|
|
|
388,632
|
|
|
|
|
972,604
|
|
|
|
|
16,383,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wendy C. Shiba
Executive Vice President,
General Counsel and Secretary
|
|
|
2009
|
|
|
|
457,000
|
|
|
|
|
0
|
|
|
|
|
106,230
|
|
|
|
|
252,918
|
|
|
|
|
411,300
|
|
|
|
|
0
|
|
|
|
|
122,982
|
|
|
|
|
1,350,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
456,417
|
|
|
|
|
400,000
|
|
|
|
|
41,580
|
|
|
|
|
41,832
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
310,357
|
|
|
|
|
1,250,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William R. Hollinger
Senior Vice President and
Chief Accounting Officer
|
|
|
2009
|
|
|
|
365,000
|
|
|
|
|
0
|
|
|
|
|
152,833
|
|
|
|
|
259,498
|
|
|
|
|
390,000
|
|
|
|
|
205,116
|
|
|
|
|
31,348
|
|
|
|
|
1,403,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
363,750
|
|
|
|
|
0
|
|
|
|
|
106,947
|
|
|
|
|
58,853
|
|
|
|
|
370,000
|
|
|
|
|
25,877
|
|
|
|
|
29,784
|
|
|
|
|
955,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
347,083
|
|
|
|
|
350,000
|
|
|
|
|
123,273
|
|
|
|
|
107,703
|
|
|
|
|
483,000
|
|
|
|
|
83,116
|
|
|
|
|
121,111
|
|
|
|
|
1,615,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wendy L. Marlett
Senior Vice President, Sales,
Marketing and Communications
|
|
|
2009
|
|
|
|
325,000
|
|
|
|
|
0
|
|
|
|
|
142,069
|
|
|
|
|
184,657
|
|
|
|
|
300,000
|
|
|
|
|
189,507
|
|
|
|
|
27,398
|
|
|
|
|
1,168,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kelly K. Masuda
Senior Vice President and
Treasurer
|
|
|
2009
|
|
|
|
310,000
|
|
|
|
|
0
|
|
|
|
|
98,441
|
|
|
|
|
162,796
|
|
|
|
|
250,000
|
|
|
|
|
0
|
|
|
|
|
23,732
|
|
|
|
|
844,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
308,958
|
|
|
|
|
0
|
|
|
|
|
81,186
|
|
|
|
|
41,372
|
|
|
|
|
250,000
|
|
|
|
|
0
|
|
|
|
|
20,932
|
|
|
|
|
702,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
296,771
|
|
|
|
|
100,000
|
|
|
|
|
78,837
|
|
|
|
|
85,238
|
|
|
|
|
355,500
|
|
|
|
|
0
|
|
|
|
|
96,459
|
|
|
|
|
1,012,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former NEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond P. Silcock*
|
|
|
2009
|
|
|
|
136,538
|
|
|
|
|
200,000
|
|
|
|
|
16,667
|
|
|
|
|
87,272
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
6,276
|
|
|
|
|
446,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Bonus: These amounts are guaranteed or discretionary
bonuses. Mr. Silcocks bonus is described above under
the heading Guaranteed Bonus. |
|
(b) |
|
Stock Awards and Option Awards: These amounts are the
aggregate compensation expense we recognized in our 2009 fiscal
year for Stock Awards (shares of restricted stock and phantom
shares) and Option Awards (stock options and SARs) granted to
our NEOs in 2009 and in prior years, computed in accordance with
ASC 718, except that, in accordance with applicable SEC rules
and guidance, we have disregarded estimates of forfeitures
related to service-based vesting conditions and reversals in
excess of amounts previously expensed in 2007 for the NEOs who
appeared in the Summary Compensation Table for that year. We
account for shares of restricted stock as equity awards for
purposes of ASC 718, and the related compensation expense was
based on our amortization of their grant-date fair value. The
grant-date fair value is equal to the closing price of our
common stock on the grant date, except for the performance |
40
|
|
|
|
|
shares granted to Mr. Mezger in July 2007, for which we use
a Monte Carlo simulation model to estimate the grant-date fair
value. We account for the phantom shares as liability awards for
purposes of ASC 718 because they will be settled in cash in the
manner described above under the heading Long-Term
Incentives, and the related compensation expense was
calculated based on the price of our common stock on
November 30, 2009, which was $13.55. We account for stock
options as equity awards for purposes of ASC 718 and the related
compensation expense was based on our amortization of their
grant-date fair value. Information used in determining these
amounts can be found in Note 18. Employee Benefit and Stock
Plans in the Notes to Consolidated Financial Statements
contained in our Annual Report. We account for SARs as liability
awards for purposes of ASC 718 because they will be settled in
cash in the manner described above under the heading
Long-Term Incentives, and the related compensation
expense was calculated using the Black-Scholes option-pricing
model with the following assumptions as of November 30,
2009, 2008 and 2007, respectively: a risk-free interest rate of
.3% to 1.6% (depending on when the specific SAR was granted),
1.2% to 1.6% (depending on when the specific SAR was granted),
and 3.1%; an expected volatility factor for the market price of
our common stock of 64.3%, 56.7% and 43.9%; a dividend yield of
1.9%, 2.2% and 4.8%; and an expected life of 1.9 to
3.5 years, 2.9 to 4.1 years and 3.7 to 3.9 years
(depending on when the specific SAR was granted). |
|
|
|
(c) |
|
Non-Equity Incentive Plan Compensation: These amounts are
the annual incentive compensation the respective NEOs earned
based on achieving fiscal year performance goals. |
|
|
|
(d) |
|
Change in Pension Value and Nonqualified Deferred
Compensation Earnings: These amounts are the change in
present value of accumulated benefits provided under our
Retirement Plan. We do not provide above-market or preferential
earnings under our Deferred Compensation Plan. |
|
|
|
(e) |
|
All Other Compensation: The amounts shown consist of the
following items: |
|
|
|
|
|
Matching 401(k) Savings Plan and Supplemental Deferred
Compensation Plan Contributions: We provide a
dollar-for-dollar
match of Deferred Compensation Plan and 401(k) Savings Plan
contributions of up to an aggregate amount of six percent of a
participants base salary. The respective aggregate 2009,
2008 and 2007 fiscal year matching contributions we made to each
NEO (other than Ms. Shiba, Ms. Marlett, and
Mr. Silcock) were as follows: Mr. Mezger $57,983,
$58,383 and $57,125; Mr. Hollinger $21,913, $21,813 and
$20,825; and Mr. Masuda $10,075, $9,300 and $9,550. The
respective aggregate 2009 and 2008 fiscal years matching
contributions we made to Ms. Shiba were $26,315 and
$25,190. The respective aggregate 2009 fiscal year matching
contributions we made to Ms. Marlett was $17,963.
Mr. Silcock did not participate in the 401(k) Savings Plan.
|
|
|
|
Premium Payments: We paid premiums on supplemental
medical expense reimbursement plans and life insurance policies
for the benefit of participating executives. These plans and
policies are described above under the heading
Benefits. The respective aggregate premiums we paid
in our 2009, 2008 and 2007 fiscal years for each NEO (other than
Ms. Shiba Ms. Marlett and Mr. Silcock) for these
plans and policies were as follows: Mr. Mezger $14,148,
$12,099 and $9,043; Mr. Hollinger $9,435, $7,971 and
$5,781; and Mr. Masuda $13,657, $11,632 and $8,552; The
aggregate premiums we paid in our 2009 and 2008 fiscal years for
Ms. Shiba were $9,904 and $8,464. The respective 2009
premiums we paid for Ms. Marlett and Mr. Silcock were
$9,435 and $1,706.
|
|
|
|
Relocation Assistance: In connection with
Ms. Shibas hiring and relocation from Cleveland to
Los Angeles, we agreed to pay for certain relocation expenses
and to provide her with a monthly housing cost differential
amount through December 2008. In 2009, Ms. Shiba received
$86,763 under this arrangement. In connection with
Mr. Silcocks hiring and relocation from Connecticut
to Los Angeles in September 2009, we agreed to reimburse his
relocation expenses in accordance with our internal policies and
to provide him an allowance of $5,000 per month for temporary
housing for up to six months. In 2009, Mr. Silcock received
$4,570 under this arrangement.
|
|
|
|
Charter Aircraft Use: In one instance in 2009, a portion
of a company-chartered aircraft trip for Mr. Mezger was
deemed to be for a personal purpose, and we incurred an
incremental cost of $11,568 for this travel.
|
|
|
|
2007 Fiscal Year Perquisites and Payments: In our 2007
fiscal year, our NEOs (other than Ms. Shiba) received
certain perquisites (including automobile allowances,
company-paid automobile fuel cards, and reimbursement of
expenses for automobile insurance, annual financial planning and
tax preparation services, and one-time estate planning
services), and certain one-time payments to offset increases
|
41
|
|
|
|
|
in stock option exercise prices following an internal review of
our stock option grant practices. We discontinued substantially
all such perquisites in July 2007.
|
|
|
|
|
|
Ms. Shiba was not an NEO in our 2007 fiscal year.
Ms. Marlett, was not an NEO in fiscal years 2007 or 2008.
Accordingly, the data for those years has been omitted from the
Summary Compensation Table in accordance with SEC guidance. |
|
* |
|
Mr. Silcocks employment with us ended on
December 14, 2009. Mr. Hollinger served as our
principal financial officer during our 2009 fiscal year prior to
Mr. Silcocks joining us on September 9, 2009,
and has served as our principal financial officer since
December 14, 2009. |
Grants of
Plan-Based Awards During Fiscal Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
Under
|
|
|
Number
|
|
|
Number of
|
|
|
or Base
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan
Awards
|
|
|
of Shares
|
|
|
Securities
|
|
|
Price of
|
|
|
Stock and
|
|
|
|
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Underlying
|
|
|
Option
|
|
|
Option
|
|
|
|
Grant
|
|
|
Type of
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
or Units
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
Name
|
|
|
Date(a)
|
|
|
Award
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)(b)
|
Mr. Mezger
|
|
|
2/19/09
|
|
|
Annual Incentive
|
|
|
$
|
500,000
|
|
|
|
$2,000,000
|
|
|
$
|
4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/09
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
489,258
|
|
|
|
$
|
15.44
|
|
|
|
$
|
3,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Shiba
|
|
|
2/19/09
|
|
|
Annual Incentive
|
|
|
|
105,110
|
|
|
|
411,300
|
|
|
|
822,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/09
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,768
|
|
|
|
|
15.44
|
|
|
|
|
506,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/09
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hollinger
|
|
|
2/19/09
|
|
|
Annual Incentive
|
|
|
|
73,000
|
|
|
|
292,000
|
|
|
|
584,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/09
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,147
|
|
|
|
|
15.44
|
|
|
|
|
487,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/09
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
162,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Marlett
|
|
|
2/19/09
|
|
|
Annual Incentive
|
|
|
|
65,000
|
|
|
|
260,000
|
|
|
|
481,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/09
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,179
|
|
|
|
|
15.44
|
|
|
|
|
337,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/09
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Masuda
|
|
|
2/19/09
|
|
|
Annual Incentive
|
|
|
|
62,000
|
|
|
|
248,000
|
|
|
|
496,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/09
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,695
|
|
|
|
|
15.44
|
|
|
|
|
262,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/09
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former NEO
|
|
|
10/1/09
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,810
|
|
|
|
|
15.44
|
|
|
|
|
900,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Silcock*
|
|
|
10/1/09
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Grant Date: The grant date for each award is the date the
Compensation Committee approved the award. The exercise price
for each award is equal to the closing price of our common stock
on the date of grant. |
|
(b) |
|
Grant Date Fair Value of Stock and Option Awards: The
grant date fair value for each award is computed in accordance
with ASC 718. |
|
* |
|
Mr. Silcock forfeited his awards upon the termination of
his employment with us on December 14, 2009. |
42
Outstanding
Equity Awards at Fiscal Year-End 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Awards:
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Value of
|
|
|
Number of
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
Shares or
|
|
|
Unearned
|
|
|
Payout Value
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
or Units
|
|
|
Units of
|
|
|
Shares,
|
|
|
of Unearned
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Stock
|
|
|
Units or
|
|
|
Shares, Units
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
That
|
|
|
That
|
|
|
Other
|
|
|
or Other
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Have
|
|
|
Have
|
|
|
Rights That
|
|
|
Rights That
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Not
|
|
|
Not
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
Name
|
|
|
Grant Date
|
|
|
(#)*
|
|
|
(#)(a)*
|
|
|
($)
|
|
|
Date
|
|
|
(#)*
|
|
|
($)(b)
|
|
|
(#)(c)*
|
|
|
($)(d)
|
Mr. Mezger
|
|
|
10/30/01
|
|
|
|
431,122
|
|
|
|
|
|
|
|
|
$13.95
|
|
|
|
10/30/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/30/01
|
|
|
|
68,878
|
|
|
|
|
|
|
|
|
13.95
|
|
|
|
10/30/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/02
|
|
|
|
102,090
|
|
|
|
|
|
|
|
|
20.07
|
|
|
|
2/13/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/8/02
|
|
|
|
44,516
|
|
|
|
|
|
|
|
|
25.63
|
|
|
|
5/8/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/7/02
|
|
|
|
400,000
|
|
|
|
|
|
|
|
|
21.51
|
|
|
|
10/7/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/24/03
|
|
|
|
74,667
|
|
|
|
|
|
|
|
|
33.24(e)
|
|
|
|
10/24/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/24/03
|
|
|
|
149,333
|
|
|
|
|
|
|
|
|
34.05(e)
|
|
|
|
10/24/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/22/04
|
|
|
|
80,750
|
|
|
|
|
|
|
|
|
40.90
|
|
|
|
10/22/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/22/04
|
|
|
|
119,250
|
|
|
|
|
|
|
|
|
40.90
|
|
|
|
10/22/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/18/05
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
63.77
|
|
|
|
10/18/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/12/07
|
|
|
|
216,700
|
|
|
|
|
108,350
|
|
|
|
36.19
|
|
|
|
11/30/16(f)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/12/07
|
|
|
|
216,700
|
|
|
|
|
108,350
|
|
|
|
36.19
|
|
|
|
7/12/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/12/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,000
|
|
|
|
$
|
731,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/12/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,264
|
|
|
|
$
|
748,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/4/07
|
|
|
|
91,667
|
|
|
|
|
45,833
|
|
|
|
28.10
|
|
|
|
10/4/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/4/07
|
|
|
|
275,000
|
|
|
|
|
137,500
|
|
|
|
28.10
|
|
|
|
10/4/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/2/08
|
|
|
|
132,606
|
|
|
|
|
265,212
|
|
|
|
19.90
|
|
|
|
10/2/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/2/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,970
|
|
|
|
|
595,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/09
|
|
|
|
|
|
|
|
|
489,258
|
|
|
|
15.44
|
|
|
|
10/1/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Shiba
|
|
|
10/4/07
|
|
|
|
24,590
|
|
|
|
|
12,295
|
|
|
|
$28.10
|
|
|
|
10/4/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/4/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,677
|
|
|
|
$
|
144,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/2/08
|
|
|
|
26,522
|
|
|
|
|
53,042
|
|
|
|
19.90
|
|
|
|
10/2/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/2/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,794
|
|
|
|
|
119,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/09
|
|
|
|
|
|
|
|
|
70,768
|
|
|
|
15.44
|
|
|
|
10/1/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,930
|
|
|
|
|
148,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hollinger
|
|
|
7/1/02
|
|
|
|
58,058
|
|
|
|
|
|
|
|
|
$26.29
|
|
|
|
7/1/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/7/02
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
21.51
|
|
|
|
10/7/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/24/03
|
|
|
|
9,334
|
|
|
|
|
|
|
|
|
33.24(e)
|
|
|
|
10/24/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/24/03
|
|
|
|
18,666
|
|
|
|
|
|
|
|
|
34.05(e)
|
|
|
|
10/24/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/22/04
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
40.90
|
|
|
|
10/22/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/18/05
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
63.77
|
|
|
|
10/18/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/12/07
|
|
|
|
17,108
|
|
|
|
|
8,554
|
|
|
|
36.19
|
|
|
|
7/12/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/12/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,327
|
|
|
|
$
|
126,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/4/07
|
|
|
|
24,590
|
|
|
|
|
12,295
|
|
|
|
28.10
|
|
|
|
10/4/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/4/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,677
|
|
|
|
|
144,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/2/08
|
|
|
|
26,522
|
|
|
|
|
53,042
|
|
|
|
19.90
|
|
|
|
10/2/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/2/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,794
|
|
|
|
|
119,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/09
|
|
|
|
|
|
|
|
|
68,147
|
|
|
|
15.44
|
|
|
|
10/1/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|